From ARMs to Fixed Rate Mortgages A Quick Look at Loans With all the different types of mortgage loans available in the marketplace today, sometimes it’s difficult to know which one is right for you. Below is a general description of conventional mortgage loan categories. Your Amerihome Lending Mortgage Planner can help you choose the loan that best fits your financial situation.

FIXED RATE

Fixed Rate loans lock in a specific interest rate for a defined period of time. Varying time frames for repayment are available with a wide range of terms. Usually the monthly payment will be higher for shorter terms, but, of course, the loan is retired sooner.

ARMS (ADJUSTABLE RATE MORTGAGES)

ARMs also are available in varying time frames. Instead of a fixed rate for the length of the loan, however, adjustable rates do just that; they change in time increments determined by you and Amerihome Lending. One-year, Three/One, Five/One, Seven/One and Ten/One ARM loans are available to help meet your needs. A One-year ARM may change every year based on an index (such as the weekly average yield on U.S. Treasury Securities) plus a margin. A Three/One ARM fixes a rate for the first three years and then may adjust yearly after that. A Five/One, Seven/One and Ten/One ARMs simply fix the initial rate for a longer period of time before adjusting annually. Depending on how long you plan to stay in your home, an ARM can help you get the lowest rate possible for the longest period of time. This wide variety of adjustable rates allows you and your Amerihome Lending loan officer to fit your mortgage to your individual needs.

As a rule, interest rates on ARMs are usually lower at the outset than fixed rate loans, and can thus be easier to qualify for. Generally, there are caps placed on how much a rate can go up or down incrementally, as well as a lifetime-of-the-loan cap.

GOVERNMENT LENDING

FHA - An FHA loan is insured by the Federal Housing Administration, and is available to anyone purchasing or refinancing their home. The down payment requirement is low and certain closing costs can be financed. Both fixed and adjustable rates are available.

VA - a VA loan is guaranteed by the Department of Veterans Affairs and is available to eligible veterans and certain unmarried surviving spouses of veterans. No down payment is required and the loan is assumable with certain restrictions.

RESIDENTIAL CONSTRUCTION LOANS

This type of loan is for anyone constructing a new home, and provides funds for building the home as well as for permanent financing once it is completed. Upon completion, the loan is converted to a permanent mortgage.