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Types of Loans

Thirty-Year Fixed Rate Mortgage
The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

Twenty-Year Fixed Rate Mortgage
A fixed rate mortgage provides you with the security of a monthly payment that doesn't change. Fixed rate loans are one of the most popular loan options today. By choosing a 20 year fixed rate loan, you will have the monthly payment that is greater than the 30 year fixed rate, but you will be building equity in your home faster.

Fifteen-Year Fixed Rate Mortgage
This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.

Ajustable Rate Mortgage (3/1 ARM, 5/1 ARM, 7/1 ARM)
These increasingly popular ARMS—also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then the rate adjusts. It's a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.

 

Wolf River Community Bank NMLS #390191
309 East Main Street, Hortonville, WI  54944
Direct:  (920) 779-7000
Fax:  (920) 779-7004
mortgages@wolfriverbank.com
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