The most common type of mortgage program where your monthly payments
for interest and principal never change.
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.
ARMS and the Differences
Choosing an ARM with an index that reacts quickly
lets you take full advantage of falling interest
Most ARM's have a low introductory rate, which is
good anywhere from 1 month to as long as 10 years.
A Special type of loan made to older homeowners
(typically 62 +) to enable them to convert the equity
in their home to cash to finance other needs.
Inter Bank Offered Rate (LIBOR)
LIBOR is the rate on dollar-denominated deposits,
also know as Eurodollars, traded between banks in
Short term mortgages that have some features of
a fixed rate mortgage.
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.
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.
Payment Mortgage (GPM)
With a GPM the payments are usually fixed for one
year at a time.
The Best Program
The right type of mortgage for you depends on many