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Personal and Business Banking

What’s the Best Mortgage for You?

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Transcript: What’s the Best Mortgage for You?

Mortgages these days come in a variety of forms, and what’s most important when it comes to choosing one can be different for everyone. For you it may be the monthly payment, for others it may be the interest rate or term of the loan, or perhaps it’s a combination of all these things. That’s why it’s important to understand the differences and then choose the mortgage that’s best for you. So, we’ll take a look at several different mortgage options.

A Fixed-Rate Mortgage provides a constant interest rate and fixed monthly principal and interest payments for the life of the loan with terms ranging from 10 to 30 years.

For those reasons, fixed-rate loans make budgeting easier, and protect you if interest rates rise in the future.

By comparison, an Adjustable Rate Mortgage, or “ARM”, has an interest rate that can fluctuate up or down. Many ARMs start at a lower interest rate than a fixed-rate mortgage for a number of years.

For example, a 5/1 ARM has a fixed interest rate for five years. After that, the rate can go up or down once each year within established limits. So, in a period of continuously low interest rates, an adjustable rate mortgage can save you significant money compared to a fixed-rate mortgage.

It can also be a good mortgage choice if you plan to live in your home for only a few years.

DCU also offers two specialty mortgages:

One is called a Jumbo Mortgage, which is a program offering large loan amounts, most common in areas where the average home prices are more expensive.

A Jumbo Mortgage offers loan amounts higher than the conforming loan limits set by the Federal Housing Finance Agency, or FHHA. While this threshold varies across the country, DCU offers jumbo loans at competitive rates that are often very close to those of conforming loans.

Another specialty mortgage DCU offers is a VA Mortgage, which is a loan guaranteed by the U.S. Department of Veteran Affairs, and available to veterans or active military members.

A VA mortgage typically requires no down payment, so the mortgage can finance 100% of the home’s purchase price and this loan has no private mortgage insurance.

So, to review:

A Fixed-Rate Mortgage has a constant interest rate and constant monthly payment.

An Adjustable Rate Mortgage starts at a lower interest rate, but can go up or down after the introductory period.

A Jumbo Mortgage offers higher loan amounts at competitive rates.

And, a VA Mortgage has benefits for active duty military and veterans.

Remember: DCU is always here for you to discuss options, answer questions, and provide you with a choice of great mortgages. For more information, call one eight hundred three two eight eight seven nine seven, go to DCU dot org backslash mortgage, or a DCU branch.