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Fixed Rate Mortgages
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 one month to as long as ten years. |
Reverse Mortgages
A special type of loan made to older homeowners to enable them
to convert the equity in their home to cash to finance other
needs. |
London Inter Bank Offered Rate (LIBOR)
LIBOR is the rate on dollar-denominated deposits, also know
as Eurodollars, traded between banks in London. |
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. |
