After you are pre-approved for a mortgage, it’s time to decide on a mortgage type. There are many types of mortgages, and choosing the right one for you is an important decision. The two most common mortgages are a Fixed Rate Mortgage and an Adjustable Rate Mortgage (ARM). If you are interested in exploring additional mortgage programs, talk to one of our mortgage professionals.
FIXED RATE MORTGAGE – The interest rate remains the same for the entire term of the loan – usually 15 to 30 years – meaning the principle and interest portions of your loan will never change. With a Fixed Rate Mortgage, your payments are stable and predictable, however, interest rates tend to be higher than with an adjustable rate.
ADJUSTABLE RATE MORTGAGE – The interest rate is linked to a financial index so the rate fluctuates with changes in the market conditions. With an Adjustable Rate Mortgage, your payments will vary of the life of the loan, but it usually includes a lifetime cap on the interest rate increase in order to protect the borrower. The advantage of an Adjustable Rate Mortgage is that if offers lower initial payments, making it easier for buyers to qualify.
When you apply for a mortgage, have the following
items available for each borrower.
– Two most recent pay stubs
– Summary of current debt (credit cards, loans, child support, etc.)
– W-2’s for the last two years
– Federal tax returns for the last two years
– Last months bank statements