Fixed Rate Mortgages

If you want the stability of a payment that changes only once or twice a year when taxes and insurance fees are assessed, this type of mortgage may be the best choice for you. Fixed rate fully amortizing loans have two distinct features:

  • The interest rate remains fixed for the life of the loan, which is most commonly set for 10, 15 or 30 years.
  • The payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term.

Because many lenders have created competing products in this category, reviewing your options may seem overwhelming. Not all fixed rate loans are designed to amortize over an extended period. And many loans currently available offer fixed rates according to terms that change at specified intervals.

In addition to standard fixed rate mortgages with terms, the products we offer generally fall in to one of the following major variations.

Balloon Mortgage

Balloon mortgages are short-term mortgages, typically with a 5 to 7 year period for a first mortgage during which monthly payments are made. The monthly payment covers the interest which accrues typically at a fixed rate. (The interest rate on a balloon mortgage can be either fixed or adjustable.)

Payments on a balloon mortgage are not always amortizing, meaning that the payments tend to be more affordable. It's for this reason that, in a market where home prices are rising rapidly, balloon mortgages are often popular with borrowers who plan to sell quickly-before the balloon payment is due.

The difference with these types of loans is that after the initial time period, which can be as little as 5 years, the remaining balance of the loan comes due. Some balloon mortgages automatically convert to another type of loan after the initial term has elapsed.

Biweekly Mortgage

With a biweekly mortgage, although payments are figured on a monthly basis, half of that monthly amount due is paid to the lender every two weeks. As a result, at the end of the year, the borrower has made 26 half-monthly payments, or the equivalent of 13 monthly payments, instead of the normal 12. It's this extra monthly payment that results in the principal benefit of a biweekly mortgage: Because the extra payment every year hastens the principal pay down, the loan will be paid off more quickly.

Graduated Payment Mortgage

A graduated payment mortgage is a type of fixed-rate mortgage on which the payment starts out low and then increases at regularly scheduled intervals.

Because the lower payments during the initial payment period is not enough to fully cover the interest owed each month, the unpaid interest gets added to the principal. This feature is called negative amortization. Because offering this increases the risk for lenders, many charge a higher interest rate when borrowers select a negative amortizing loan. Similar to balloon mortgages, many borrowers select this type of program in markets where housing prices are on a sharp increase or when buyers do not intend to own the home for more than 5-10 years.

For you, these terms mean that though the interest rate remains fixed for the life of your loan, your principal and consequently your monthly payment will increase over time.

Certain you want a fixed rate, but still need more details on our current offers? Contact us for more details.