More information on the types of loan programs.

FIXED RATE MORTGAGES

The most common type of mortgage program where your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable.

​Fixed rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. There are also "biweekly" mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every year.)

Fixed rate fully amortizing loans have two distinct features. First, the interest rate remains fixed for the life of the loan. Secondly, the payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term. The most common fixed rate loans are 15 year and 30 year mortgages.

During the early amortization period, a large percentage of the monthly payment is used for paying the interest. As the loan is paid down, more of the monthly payment is applied to principal. A typical 30 year fixed rate mortgage takes 22.5 years of level payments to pay half of the original loan amount.

ADJUSTABLE RATE MORTGAGES (ARMs)

These loans generally begin with an interest rate that is 2-3 percent below a comparable fixed rate mortgage, and could allow you to buy a more expensive home.

​However, the interest rate changes at specified intervals (for example, every year) depending on changing market conditions; if interest rates go up, your monthly mortgage payment will go up, too. However, if rates go down, your mortgage payment will drop also.

There are also mortgages that combine aspects of fixed and adjustable rate mortgages - starting at a low fixed rate for seven to ten years, for example, then adjusting to market conditions. Ask your mortgage professional about these and other special kinds of mortgages that fit your specific financial situation.

CONVENTIONAL

A home loan that is not insured or guaranteed by the federal government. A conventional loan can be for conforming or non-conforming loan amounts.

​VA

A mortgage that is guaranteed by the Department of Veterans Affairs (VA) for qualified veterans of U.S. military forces.

​FHA

A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government loan. FHA mortgage insurance protects the lender (not the borrower) if a borrower defaults on the FHA loan. This insurance enables a lender to provide loan options and benefits often not available through conventional financing.

​USDA

A USDA home loan is a mortgage either made or guaranteed by the United States Department of Agriculture's Rural Housing Service agency to help households with very low to moderate incomes purchase safe and affordable homes in rural areas.

​HELOC

A line of credit secured by the borrower's residence. The typical HELOC term is 30 years: a 10-year draw period followed by a 20-year repayment period. A HELOC is often used for home improvements, debt consolidation or other major expenses. In most cases, you can withdraw funds up to your available credit limit for the first 10 years (your draw period) using convenience checks, debit cards or money transfer via Online Banking.

​NON-QM

If your income or credit history falls outside the stringent guidelines set by standard mortgage loan programs, a non-QM loan may be worth considering. Non-QM is short for non-qualified mortgage, and understanding how non-QM loans work may help you decide if they’re a worthwhile financing option for you.

​Non-QM loans are handy for people who have found their dream home but were denied a home loan under qualified-mortgage standards. A non-qualified mortgage may provide a temporary lending solution until you meet regular mortgage guidelines and can refinance to a traditional loan.

​Non-QM loans are not like subprime loans from the last housing crisis. Lenders must make a good-faith effort to verify you can repay the loan. However, non-QM lenders can create their own guidelines to prove you can afford the monthly mortgage payments.