We offer our clients the choice of 40, 30, 20, 15 and 10-year fixed-rate mortgages. These loan programs have the same interest rate for the life of the loan. In addition, the principal + interest monthly payment never changes. Fixed-rate mortgages are a great choice if you plan to stay in your home for a long time or if you like the peace of mind of knowing your payment will not change.
We also offer our clients the choice of Adjustable Rate Mortgages (ARM), such as 3/1, 5/1, 7/1 and 10/1 ARM.
An ARM is a mortgage in which the interest rate and monthly payments are fixed only for the initial fixed rate period of 3, 5, 7, or 10 years, depending on the loan program. After the initial fixed period, the interest rate and payments are adjusted periodically based on a pre-selected index. The rate and payments on an ARM can rise and fall with the market and will follow the movement of the index up and down, with certain limits.
For example, consider a 5/1 ARM at 6.25% with 5/2/5 caps and a margin of 2.25 over the 1-year LIBOR index:
- 5/1: the "5" means that the interest rate is fixed for the first five years. The "1" means that the interest rate adjusts one time every year after the first five years.
- 6.25% means that the interest rate is fixed at 6.25% during the first five years. This is called the "initial start rate".
- 5/2/5 caps:
- The first number - "5" - means that the interest rate can adjust up to 5% over the initial start rate in the first year after the fixed period ends (year 6). This means that if the initial start rate is 6.25%, the interest rate can go up to 11.25% in year six (6.25% initial start rate + 5 = 11.25%).
- The second number - "2" - means that in every year after the first adjustment in year 6, the interest rate can adjust up or down up to 2% annually.
- The third number - "5" - means that the interest rate can never go up more than 5% over the initial start rate during the entire life of the mortgage. In this example, the maximum interest rate over the life of the mortgage would be 11.25% (6.25% initial start rate + 5 = 11.25%).
- 2.25 margin - In this example, the margin of 2.25 over the 1-year LIBOR index means that after the first five years, the interest rate would be calculated by adding 2.25% to the 1-year LIBOR index at the time of the adjustment. LIBOR stands for "London Interbank Offered Rate".
Contact us to explore the different loan programs and see which one best fits your needs.