Mortgage Product Options

Last updated: September 28, 2017

Exploring Options

Fixed-Rate Mortgage

A fixed-rate mortgage has the advantage of being predictable. Principal and interest payment stay the same for the duration of the loan.  

Adjustable-Rate Mortgage (ARM)

An ARM usually begins with a lower payment than the fixed-rate loan. However, the interest rate and payment often rise rapidly over time. The rate adjusts based on an index but lenders use a variety of indexes. A borrower should ensure that he could afford the maximum payment before accepting the loan.

To learn more about an Adjustable-Rate Mortgage click here.

Convertible Adjustable Rate Mortgages

 An adjustable-rate mortgage that gives the borrower the option to convert to a fixed-rate mortgage. A fee is often charged for the conversion.

Graduated Payment Mortgages

This loan offers monthly payments that start lower and gradually increase at predetermined times.

FHA Loan

A loan made by a FHA-approved lender and insured, or guaranteed, by the Federal Housing Authority. This reduces the risk to the lender, and offers increased borrowing power to qualified applicants.

VA Loan

These loans are guaranteed by the United States Department of Veterans Affairs. These loans allow veterans and those serving in the military to obtain affordable home loans.

Balloon Mortgage

A Balloon Mortgage has low payments for a fixed period. After that period, the entire balance of the loan is due. In some situations, a balloon mortgage can be refinanced before the final payment is due.  

Interest-Only

The borrower will pay only the interest on the loan for a fixed period. After that period, the payments will include a principle payment or require the principal to be paid as a lump sum.

Home Equity Line of Credit (HELOC)

 A specific amount of credit based on the appraised value of the home minus the outstanding balance of the mortgage. The lender and the borrower agree to a “draw period” where the line of credit is open. The full principal amount of the loan is due at the end of the draw period.

Learn more about a HELOC here.

Reverse Mortgages

A product that allows conversion of part of the equity in your home into cash without having to sell the home or pay additional bills.

Learn more about reverse mortgages here

For Tools and Resources to help with the home buying process click here.