Types of Home Mortgages
Mortgages come in many forms. With a fixed-rate mortgage, the borrower pays the same interest rate for the life of the loan. Her monthly principal and interest payment never change from the first mortgage payment to the last. Most fixed-rate mortgages have a 15- or 30-year term. If market interest rates rise, the borrower’s payment does not change. If market interest rates drop significantly, the borrower may be able to secure that lower rate by refinancing the mortgage. A fixed-rate mortgage is also called a “traditional" mortgage.
With an adjustable-rate mortgage (ARM), the interest rate is fixed for an initial term, but then it fluctuates with market interest rates. The initial interest rate is often a below-market rate, which can make a mortgage seem more affordable than it really is. If interest rates increase later, the borrower may not be able to afford the higher monthly payments. Interest rates could also decrease, making an ARM less expensive. In either case, the monthly payments are unpredictable after the initial term. (more at investopedia.com)
If you think you may be ready to buy your new home, give us a call, at 256-990-5789, and one of our Mortgage experts will help you decide on the right direction.
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Copyright © 2017 Alabama Mortgage Lending. All Rights Reserved. AL Mortgage Lending. is a registered lending provider. NMLS# 209255. 3316 Bob Wallace Avenue , Huntsville, AL 35805. Telephone Number 256.990.5789 All loans are subject to credit and property approval. This is not a commitment to lend or extend a mortgage. Contact us at firstname.lastname@example.org