Home – Loan Programs
Which Mortgage Option Is Best For You?
Whether you are ready to purchase, or refinance, the Loan Advisors at Ascent Home Loans will help you choose the best mortgage that match your financial circumstances.
Discover the difference between Fixed or Adjustable, Jumbo or Conforming and other loan types below.
We provide the options – you get the loan!
Fixed Rate Mortgage
A fixed rate mortgage is the most popular loan program chosen by homeowners. If you are one of the many homeowners who desire a stable monthly interest rate and payment over the life of your loan, then a fixed rate could be the right loan for you, too.
With a fixed rate loan, it doesn’t matter what is happening in the market. If interest rates begin fluctuating wildly, your rates will remain steady and sure. Nobody knows what the future holds, but with a fixed rate mortgage you can have the peace of mind that nothing will cause your rates and payments to rise.
Choose a fixed rate term that works for your financial goals. You have the freedom to select a 15-year or 30-year fixed rate loan. In addition, you can pay your loan off faster whenever you would like. If you choose, you can make higher monthly payments and reduce the amount of time it will take to pay down your principal or pay off your mortgage before the end of your fixed term.
30 Year Fixed
- The most popular mortgage loan program
- A stable interest rate and reliable monthly payments over the life of your loan
- Build equity over time and pay principal balance down faster whenever you choose
A 30-year fixed is a great option when you want peace of mind of stable monthly payments to reach your long-term financial goals.
15 Year Fixed
- Interest rates are typically lower than 30-year fixed
- A fixed rate loan that allows you to pay principal down faster than 30-year fixed
- Pay higher monthly payments in order to pay less in total interest over life of loan
A 15-year fixed is a terrific option when you prefer a higher monthly payment in exchange for paying less in interest, want to pay your house off sooner, or when you have short-term plans for your home.
Adjustable Rate Mortgage
An Adjustable Rate Mortgage, or ARM, can be a powerful tool for homeowners. An ARM is a mortgage that offers a low introductory fixed rate term, typically for 5, 7, or 10 years. After this period is over, the adjustable period follows for the remainder of the 30 year term. During this adjustment period the interest rates can adjust up or down, depending on the financial index it is attached to.
During the initial fixed period, the interest rates on an ARM are generally lower than with a 30 year fixed. This means lower monthly payments for those first 5, 7, or 10 years. If you plan on selling or refinancing your home in 5-7 years, the ARM is a great option for lowering your rate and payments during that introductory fixed period.
- Lower interest rates and payments early in the life of the loan
- Mortgage payments and interest rates remain fixed for introductory period
- Caps on interest limit the amount a rate can rise annually and over the life of the loan
Big Benefits For Short Term Goals
Lenders are able to offer lower interest rates on an ARM because they only have to guarantee that rate for the introductory fixed period. Luckily, the average American refinances or moves every 5-7 years, which just happens to be the same fixed period on an ARM.
For that period of time, you can benefit from lower interest rates and monthly payments compared to a 30-year fixed.
Save money each month with lower mortgage rates/ payment
Possibly qualify for a higher loan amount and afford more home
Pay off your principal balance faster by making additional payments each month
What happens if you don’t refinance or move in the next 5- 7 years, and you reach the end of your ARM fixed term? When an ARM adjusts, the interest rates may be higher or lower than they are when you first get the loan. There is a risk of your interest rate and payments adjusting up. If your ARM does adjust up, a Cap will limit the amount that the loan can go up annually and over its lifetime. You will be able to anticipate a worst-case scenario and know exactly how far up your interest rate can change that year and beyond. Keep in mind that, while the initial fixed period of an ARM benefits the borrower, the adjustable period benefits the lender.
The bottom line is that an ARM can be a powerful tool to get you the lowest possible interest rates and monthly payments for a set period of time. This option is not right for everyone, but if you plan on moving or refinancing in the next 5 to 7 years, an ARM could be an ideal loan for you.
At Ascent Home Loans, our loan experts can help you to determine if an ARM is the best fit for your financial goals.