Fixed Rate Mortgages
Fixed rate mortgage programs are one of the most popular mortgage loan programs at Poli Mortgage Group. A fixed rate program offers a fixed interest rate for a specific number of years, with both variables (rate and term) established at the onset of the loan. The most common fixed interest rate mortgage periods are 30 years or 15 years. However, amortization periods of 10, 20 and 25 years are also available.
As compared to other mortgage loan options, such as the Adjustable Rate Mortgages (ARM), the interest rate on a fixed rate mortgage may be higher. This means your monthly payments will also be higher and the amount you can qualify to borrow will be limited. However, fixed rate mortgage programs offer the security of knowing your interest rate will never change throughout the life of your loan.
The 30 year fixed rate mortgage:
With a full 30 years to pay this loan off, this mortgage loan program may give you the ability to qualify for a higher loan amount, and your monthly payments may be lower than other fixed rate financing options with shorter amortization periods.
The 15 year fixed rate mortgage:
A 15 year fixed rate mortgage will require a higher monthly mortgage payment than a 30 year fixed rate mortgage will with the same loan value. However, if you can afford to make the higher monthly payment, a 15 year fixed rate mortgage may be a good option for you. Typically, interest rates on the 15 year mortgage loan are significantly lower than with a 30 year mortgage. The 15 year mortgage also offers a substantial savings on the total interest paid over the life of the loan.
For more information on Poli Mortgage Group’s fixed rate loan programs, please contact us at 781-232-8000 or get in touch with one of our experienced loan professionals who can help you determine which fixed rate mortgage program is best for you.
Adjustable Rate Mortgage (ARM) Programs
In addition to fixed rate mortgages, Poli Mortgage also offers Adjustable Rate Mortgage (ARM) programs. ARM loans are generally structured with a lower introductory interest rate that fluctuates over the life of the loan according to a set of terms identified in the loan agreement. ARM rate adjustments typically parallel the movement of a current index rate, such as treasury securities, LIBOR or the Cost of Funds Index. The ARM loan agreement often also sets a cap on how high or low the interest rate can fluctuate during specified adjustment periods, as well as over the life of the loan. An ARM may make sense for you depending on how long you plan to be in your home.
For example, on a 5/1 year ARM loan with caps of 2/2/5, your interest rate would have the following limitations:
- The initial cap — a 2 in this example — indicates the interest rate cannot be increased or decreased more than 2 percentage points at the end of the first term of the loan. In this case, that would be 5 years.
- The second 2 represents a cap on how much the interest rate can be adjusted up or down annually after the first interest rate adjustment.
- The final number in the sequence — a 5 in this case — is known as the lifetime cap. This variable limits the number of percentage points an interest rate can increase or decrease over the life of the loan. All ARM mortgages are required to have a lifetime cap.
Common Adjustable Rate Mortgage Options:
The 3 in a 3/1 ARM indicates the length of time your initial interest rate will be honored, and the 1 indicates an annual adjustment period over the remaining length of the full loan term (27 years).
In this scenario, the initial interest rate is locked for 5 years, then adjusted annually thereafter for the remaining 25 years of the full loan term.
This ARM loan offers a an initial rate lock of 7 years, then annual adjustments for the remaining 23 years of the full loan term.
Poli Mortgage Group offers several adjustable rate mortgage programs, with each of them offering a unique set of higher or lower ARM terms.
For more information on if an ARM will work best in your situation, please contact a Poli Mortgage loan officer.
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