With a fixed-rate mortgage, the interest rate remains the same throughout the length of the loan. As a result, your principal and interest payments are predictable from the first payment to the last.
Fixed-rate loans are usually offered with repayment terms of 30, 25, 20 or 15 years.
The rates for fixed-rate loans are often slightly higher than the rates for adjustable-rate loans.
Fixed-rate loans are a good choice if you plan to remain in the same home for several years and/or if interest rates are expected to rise.
We can tell you more about fixed-rate loan programs.
Adjustable-rate mortgages are home loans with interest rates that vary based on changes in market interest rates.
Adjustable-rate mortgages are usually offered with 30-year terms.
The initial rate for an adjustable-rate mortgage is usually slightly lower than for a fixed-rate loan. That initial rate remains constant during an introductory period. As a general rule, the shorter the introductory period, the lower the initial interest rate. Often the fixed introductory period is set based on the length of time the borrower expects to own the home.
After the introductory period expires, the interest rate is subject to adjustment at predetermined intervals—usually every six months. Rate adjustments are based on market interest rates, but adjustment caps limit how much an interest rate can change in a specified time period.
Often, adjustable-rate mortgages offer borrowers the option of an interest-only loan for a fixed period of time. This results in a lower payment for that period.
Adjustable rate mortgages may be a good choice if you don’t plan to own the home for a long period of time, or if interest rates are high and expected to come down.
We can tell you more about adjustable-rate mortgages.
Buying your first home is a big step. The federal and state governments offer a variety of programs that can make taking that step easier for many would-be homeowners. These include government-insured mortgages, such as Federal Housing Administration (FHA) and Veterans Administration (VA) loans, and state-sponsored bond programs. To qualify for these loans, borrowers must fall within certain annual income limits. In addition, the Federal National Mortgage Association (FNMA, or Fannie Mae) offers start-up loans with low down-payment requirements.
A good first step for any first-time homebuyer is to talk with a professional mortgage consultant to see what options are available and what you can afford.
We can tell you more about loan options for first-time homebuyers.
Government-insured loans usually offer low down payments and below-market interest rates, as well as easier credit and income guidelines than conventional loans. That may make them a good option for first-time homebuyers, for borrowers with low to moderate incomes, or those with limited cash or minor credit problems.
We can tell you more about government-sponsored loans and refinancing options.
Several states offer low interest home loans and other housing assistance for qualified low- and moderate-income buyers. For example, the New Jersey Housing Mortgage Finance Agency (NJHMFA) offers low-interest, fixed-rate 30-year mortgages. These loans are offered through approved lenders like Republic Bank | Oak Mortgage. NJHMFA also offer down payment and closing cost assistance through a program called “Smart Start” enabling borrowers without a lot of money to still purchase a home.
Under federal law, to qualify for state-sponsored home purchase loans, buyers must fall within certain annual income limits. The loans are typically only available to first-time buyers or to buyers who have not owned and occupied a primary residence for a period of time. Limits also apply to the purchase price of the home; these limits often vary by location within the state. Buyers may be required to take credit counseling and/or homebuyer education courses.
In addition to low-interest loans, borrowers also may be eligible for down payment and/or closing cost assistance.
Learn more from the Pennsylvania Housing Finance Agency.
Learn more from the New Jersey Housing Resource Center.
We can tell you more about state bond programs.