Fixed Rate Mortgages

The fixed rate mortgage is the most common type of loan program because monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable.

Fixed rate mortgages are available from intermediate to long-term.

Fixed rate fully amortizing loans have two distinct features. First, the interest rate remains fixed for the life of the loan. Second, the payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term. The most common fixed rate loans are for intermediate for long term.

Adjustable Rate Mortgages (ARMs)

These loans generally begin with an interest rate that is below a comparable fixed rate mortgage, and could allow you to buy a more expensive home.

However, the interest rate changes at specified intervals (for example, every year) depending on changing market conditions; if interest rates go up, your monthly mortgage payment will go up, too. However, if rates go down, your mortgage payment will drop also.

There are also mortgages that combine aspects of fixed and adjustable rate mortgages - starting at a low fixed rate for seven to ten years, for example, and then adjusting to market conditions. Ask your mortgage loan officer about these and other special kinds of mortgages that fit your specific financial situation.