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Category: Mortgages

Loan Types

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What are typical reasons why someone might choose a 15-year loan rather than a 30-year loan?
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What are typical reasons why someone might choose a 15-year loan rather than a 30-year loan?
A 15-year fixed rate mortgage gives you the ability to own your home free and clear in 15 years. While the monthly payments are somewhat higher than a 30-year loan, the interest rate on the 15-year mortgage is usually a little lower. More importantly, you'll pay less than half the total interest cost of the traditional 30-year mortgage. However, if you can't afford the higher monthly payment of a 15-year mortgage don't feel alone. Many borrowers find the higher payment out of reach and choose a 30-year mortgage.
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What is an adjustable rate mortgage?
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What is an adjustable rate mortgage?

An adjustable rate mortgage, or an "ARM" as they are commonly called, is a loan type that offers a lower initial interest rate than most fixed rate loans. The trade off is that the interest rate can change periodically, usually in relation to an index, and the monthly payment will go up or down accordingly.

Against the advantage of the lower payment at the beginning of the loan, you should weigh the risk that an increase in interest rates would lead to higher monthly payments in the future. It's a trade-off. You get a lower rate with an ARM in exchange for assuming more risk. For many people in a variety of situations, an ARM is the right mortgage choice, particularly if your income is likely to increase in the future or if you only plan on being in the home for three to five years.

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Who should typically consider a 15-year mortgage?
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Who should typically consider a 15-year mortgage?
The 15-year fixed rate mortgage is most popular among younger homebuyers with sufficient income to meet the higher monthly payments and pay off the house before their children start college. They own more of their home faster with this kind of mortgage, and can then begin to consider the cost of higher education for their children without having a mortgage payment to make as well. Homebuyers who are more established in their careers, have higher incomes, and desire to own their homes before they retire may also prefer this type of mortgage.
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Do you charge for any prepayment penalties?
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Do you charge for any prepayment penalties?
Some lenders may require you to pay special fees or penalties if you pay off the ARM early. We never charge a penalty for prepayment.
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What is Negative Amortization and do your adjustable rate mortgages allow for it?
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What is Negative Amortization and do your adjustable rate mortgages allow for it?
"Negative Amortization" occurs when your monthly payment changes to an amount less than the amount required to pay interest due. If a loan has negative amortization, you might end up owing more than you originally borrowed. None of the ARMs we offer allow for negative amortization.
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What is the maximum percentage of a home's value that someone can typically borrow?
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What is the maximum percentage of a home's value that someone can typically borrow?
The maximum percentage of your home's value that you can borrow depends on the purpose of your loan, how you use the property, and the loan type you choose. So, the best way to determine what loan amount we can offer is to complete our online application.
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What is an “Adjustment Period” with an adjustable rate mortgage?
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What is an “Adjustment Period” with an adjustable rate mortgage?
With most ARMs, the interest rate and monthly payment are fixed for an initial time period such as one year, three years, five years, or seven years. After the initial fixed period, the interest rate can change every year. For example, one of our most popular adjustable rate mortgages is a five-year ARM. The interest rate in this example will not change for the first five years (the initial adjustment period) but can change every year after the first five years.

 

 

These questions and answers are provided for general information only and may not be completely accurate in every situation. The information provided is not legally binding on MutualBank or any of its affiliates or subsidiaries. For assistance with specific questions regarding your account(s), please contact us.

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