financial section: mortgages

Fixed-Rate Mortgages

Usually we have 30-year, 20-year, and 15-year, fixed-rate loans. These loans usually come with no pre-payment penalty and are an excellent choice when rates are low - like right now!

Advantages: The rate will stay the same for the life of the loan. If you can secure a fixed-rate loan when interest rates are low, you'll be sitting pretty if and when rates go back up.

Disadvantages: Interest rates and total interest paid will be higher than with an adjustable-rate loan, and you have less flexibility in the event that rates go down.

Adjustable-Rate Mortgages

We have 1-year fixed, 3-year fixed, 5-year fixed, and 7-year fixed adjustable mortgages. These loans are usually lower than what you would obtain with a 30-year fixed-rate loan. After the fixed period the loan becomes adjustable, with a rate that reflects the rates available at that time.

Advantages: You may be able to get into a bigger, more expensive home with lower initial monthly payments. If you believe it is likely you will be selling before the end of the fixed-rate period, this could be an excellent way to minimize your monthly housing expenses and improve your cash flow.

Disadvantages: With an adjustable-rate mortgage you will have less stability in terms of interest rates and monthly payments. If your risk-tolerance is low or you plan to stay in the home for a significant period of time, this may not be your best choice.

Interest-Only Mortgage Loans

These loans are fixed for a pre-determined term then become adjustable, and have the lowest monthly payment of most loan programs, as the monthly payment is only paying the interest.

Advantages: Similar to a traditional ARM, you may be able to get into a bigger, more expensive home with lower initial monthly payments. This is a good way to go for the short-term buyer, who will sell or refinance in a short period of time.

Disadvantages: The payments are only servicing the loan interest, and therefore the mortgage will never be paid down with this loan.