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The following is a list of mortgage types with an explanation of the different advantages each mortgage has to offer. When you are ready to take the leap and make the investment, CU Home Loans will be there to help. Contact one of our financial advisors to see how owning your own home can become a reality.
| ADJUSTABLE RATE MORTGAGE |
| Adjustable rate mortgages (ARMs), a popular mortgage option, offer lower initial interest rates than most fixed rate mortgages. After the initial period, the interest rate is adjusted periodically based on market conditions. Monthly payments then remain the same until the next market evaluation. To protect you from extreme interest rate fluctuation, ceilings or “rate caps” exist to dictate the most your rate can change at each adjustment period. A lifetime cap also dictates the maximum interest rate for your ARM loan. |
| An adjustable rate mortgage might be a good choice if you: |
- Plan only to stay in your home for a short time.
- Want lower initial payments.
- Expect to earn more money in the future, despite your limited current income.
- Don’t anticipate taking on any sizeable debts in the near future.
- Will be able to handle possible future rate increases. |
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At CU Home Loans, we offer a variety of adjustable rate mortgages. Talk with one of our specialists to learn more. |
| FIXED RATE MORTGAGE |
| Fixed rate mortgages offer the security of a fixed interest rate for the entire term of the loan. Your monthly payment will never change, because unlike adjustable rate mortgages, the market rate changes do not effect what you pay. If stability is important to you when planning for expenses, a fixed rate mortgage might be the best option for you. |
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Fixed rate mortgages might be a good choice if you: |
- Are on a fixed income.
- Prefer consistency in your payment schedule.
- Like the security of knowing your rate cannot rise. |
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There are several different types of fixed rate mortgages to choose from. All of our financial advisors are more than happy to help you find the best fit. |
| INTEREST ONLY MORTGAGE |
| This type of mortgage is unique in that you only pay the interest on your loan for the first five, 10 or 15 years. These loans offer the lowest monthly rate possible, but at the end of this period you must still pay for the full amount borrowed. If you have extra money at any point, you can always make a payment towards the principal, even when you are still just making monthly interest payments. Interest only mortgages are ideal for some people, but certainly not for everyone. |
| Interest only might be good choice if you: |
- Have a sporadic income cycle. If you receive commission or bonuses on top of your
normal salary, you would be able to pay more sometimes to help pay off your principal.
- Want to save or invest the money you save during the first term of the loan for later
use in paying off the principal. |
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All of our financial advisors are happy to explain interest only mortgages in more detail. Contact us today to set up an appointment. |
| INTERIM ADJUSTABLE/FIXED ADJUSTABLE |
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Interim adjustable mortgages can be seen as offering the best of both fixed and adjustable mortgages. With an interim adjustable, the loan is fixed for a period of 3-10 years before automatically converting to an adjustable rate. The fixed rate terms are usually cheaper .5%-1% cheaper than a traditional 30 year fixed rates. |
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An interim adjustable mortgage might be a good option if you: |
- Like the idea of a temporary fixed rate.
- Plan on selling your home in the next 3-10 years. |
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The experienced professionals at CU Home Loans can explain interim adjustables in greater detail and help you decide if this is the right plan for you. We will assist you in making the best decision based on your financial situation. |
| PIGGYBACK/SPLIT LOANS |
| Large loans usually come with high interest rates. The Piggyback or Split Loan is a way to "beat the system" by splitting the jumbo loan into two smaller loans. You end up taking out a fixed-rate and an adjustable-rate loan, with no penalty for the secondary financing. The interest rate on each loan ends up being lower than the rate on a single jumbo loan, saving you significant money in the long run. |
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The benefites of Piggyback Loans include: |
- Cost Savings: The combined interest rate is lower than a traditional jumbo rate.
- Reduced Interest Rate Risk: Because only part of the loan is adjustable, you
have more protection against rising interest rates.
- Lower Payments: Unlike with traditional fixed-rate mortgages, you can lower
your payments through pay-downs. |
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For more information about piggyback loans, speak with a CU Home Loans associate today! |
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