When it comes to financing your home, it’s important to understand the differences between the types of mortgage loans available so you can feel confident about the one you choose.
Nationwide Bank® offers several types of mortgage loans to fit your needs. We also offer a Best Price Guarantee that guarantees you a great rate on the mortgage product you select or we’ll pay you $500.
This type of mortgage offers a set interest rate over the term of the loan – whether it is 10, 15, 20 or 30 years. That means your monthly payments will remain the same. In the beginning of the loan period, the majority of monthly payments will pay off the loan’s interest. During the latter part, you’ll pay more toward the loan’s principal.
A fixed mortgage may be right for you if:
- You’re planning to stay in the house for several years.
- You want the security of knowing your interest rate will not change.
- You like having a predictable monthly payment so you can better budget for other expenses.
A fixed mortgage loan may not be the right choice if you’re locked into the same interest rate for the term of your loan and you can’t take advantage of lower rates unless you refinance. If that’s the case, you could have to pay additional closing costs, as well as appraisal and title fees.
To get a better understanding of whether this type of mortgage loan may be the best option for your financial situation, get more information about fixed mortgages.
Adjustable-rate mortgages (ARMs)
ARMs offer set adjustment periods when the interest rate may increase or decrease, depending on current market conditions. Interest rates for ARMs are usually lower than other types of mortgages for the first few months to the first few years, depending on the terms. Rate caps are put in place so that the interest rate can never increase or decrease by more than the determined percentage over a pre-disclosed period of time.
An ARM loan may be right for you if you expect to live in a home for a short time period, respective to the term of your ARM. Your payments may increase once the loan’s introductory rate period ends. And monthly payments will be harder to predict, making it more difficult to budget for other expenses.
To learn whether an ARM loan may be the best option for your borrowing needs, get more information about adjustable-rate mortgages.
A jumbo mortgage may become an option when you’re purchasing a larger, more expensive home. The loan amounts eligible for this type of mortgage are determined by government-sponsored agencies Fannie Mae and Freddie Mac and change yearly. Jumbo mortgages typically have a higher interest rate due to the higher loan amount.
If current interest rates are lower than the one on your current loan, mortgage refinancing may be able to reduce your monthly loan payments.