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Financing
11
Different Types of Mortgages
There
are many different ways to finance the purchase of your home.
The most common types are Mortgages you obtain through a Mortgage
Lender or Mortgage Loan Officer. To help our Buyers better
understand what their options are, we have provided a brief
overview of 11 different types of mortgages. We encourage
all of our buyers to work with a qualified financial advisor
or mortgage lender to determine which finacial products work
best for their situation. Be sure to visit our Preferred
Providers page for a list
of our favorite Mortgage Lenders.
1-Year
Adjustable Rate Mortgage (ARM)
A 1-year ARM has payments that adjust once each year and the
payments are calculated over a 30-year period. Typically,
this type of loan has the lowest initial start rate and can
therefore help you qualify for a larger loan amount.
3/1
ARM
This loan type has fixed payments for the first three years
and then turns into a 1-year ARM, adjusting every year thereafter.
The loan payments are calculated over a period of 30 years.
3/3 ARM
The 3/3 ARM adjusts every 3 years for the life of the loan.
The loan payments are calculated over a period of 30 years.
5/1
ARM
This loan has fixed payments for 5 years and then turns into
a 1 – year ARM, adjusting every year thereafter. The
loan payments are calculated over a period of 30 years.
5-Year
Balloon
The loan payments on a five-year balloon are calculated over
a 30-year period, but the loan has a life of only years. At
the end of 5 years, the balance of the loan is due. Columbia
National offers borrowers the ability to convert the balloon
to a fixed rate for the remaining 23 years if some conditions
are met.
7-Year
Balloon
The loan payments on a 7-year balloon are calculated over
a 30-year period, but the loan has a life of only 7 years.
At the end of 7 years, the balance of the loan is due. Columbia
National offers borrowers the ability to convert the balloon
to a fixed rate for the remaining 23 years if some conditions
are met.
7/23
Two-Step
The Two-Step has fixed payments for first 7 years. At the
end of the 7 years, the loan automatically converts to a fixed
rate loan for the remaining 23 years of the loan. Payments
are calculated over a 30-year period.
7-1ARM
This loan has fixed payments for 7 years and then turns into
a 1-year ARM, adjusting every year after. The loan payments
are calculated over a period of 30 years.
10/1
ARM
This loan has fixed payments for 10 years and then turns into
a 1-year arm, adjusting every year thereafter. The loan payments
are calculated over a period of 30 years.
30-Year
Fixed Rate Loan
Payments on 30-year loans are calculated over a period of
30 years and have a fixed interest rate and payment for the
life of the loan. If you have limited funds for a down payment
or you are a veteran, ask your loan officer about Columbia
National’s FHA or VA 30-year loan.
15-Year
Fixed Rate Loan
Payments of 15-year loans are calculated over a period of
15 years and have a fixed interest rate and payment for the
life of the loan. Payments are higher for this loan than the
30-year fixed rate loan, but it builds up equity more quickly.
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