The most common type of mortgage program where your monthly payments
for interest and principal never change.
Adjustable
Rate Mortgages (ARM)
These loans begin with an interest rate that is lower than a comparable
fixed rate mortgage, but the rate changes at specified intervals.
Standard
ARMS and the Differences
Choosing an ARM with an index that reacts quickly lets you take
full advantage of falling interest rates.
Introductory
Rate ARM's
Most ARM's have a low introductory rate, which is good anywhere
from 1 month to as long as 10 years.
Balloon Mortgages
Short term mortgages that have some features of a fixed rate mortgage.
Interest Rate Buydowns
The buyer would pay points above current market points in order
to pay a below market interest rate during the first two years
of the loan. At the end of the two years they would then pay the
old market rate for the remaining term.
Cost of Funds Index (COFI)
The ratio of the dollar amount paid in interest during the month
to the average dollar amount of the funds for that month constitutes
the weighted average cost of funds ratio for that month.
Graduated Payment Mortgage (GPM)
With a GPM the payments are usually fixed for one year at a time.
