With a fixed rate mortgage, you know exactly what your principal and interest payment will be every month. It won't change because your interest rate won't change. There is only one instance in which your total payment will change when you have a fixed rate mortgage. If you pay your home insurance and real estate taxes through your mortgage, any time there is a change in those costs, there will be a change in that part of your mortgage payment as well.

If interest rates go up, you're protected with a fixed rate mortgage. But you won't benefit if rates go down. You can, however, take advantage of falling rates by refinancing!

Consider a fixed rate mortgage if you: Want the certainty of a fixed principal and interest payment.

Believe interest rates will probably go up. Are on a fixed or restricted budget.

Adjustable Rate Mortgages (ARMs)

Compared to fixed rate mortgages, ARMs offer a lower interest rate to start, so your monthly payments are generally lower.* But the interest rate is adjusted at times, based on an "index." Every lender then adds a set margin to that index. The result? Your payments could go up or down, depending on the economy and its resulting indicators. The index used, the margin added, and how often your rate is adjusted (usually every 1, 3, 5, or 7 years) can be different from lender to lender. Be sure to ask what they are.

Look for ARMs with interest rate "caps." These limit how much your rate can go up or down each time it is adjusted, and how much it can go up or down over the life of the loan.

Consider an Adjustable Rate Mortgage if you:

Want or need more home that you can qualify for now at a fixed rate.

Are confident that your income will increase.

Plan on moving within seven years of buying your home.

What else you should know about Adjustable Rate Mortgages (ARMs).

If the starting rate is very low compared to others, you're probably getting a "discounted" rate. In that case, even if market rates stay the same, your payments will go up when it's time to adjust.

Some lenders offer first payments that don't cover the cost of the principal and interest. Called "negative amortization," this actually increases the principal amount of your mortgage. Some mortgage companies do not do this. If you talk to lenders on your own, I caution you to ask them about negative amortization.

Other ARMs allow you to convert to a fixed rate later, usually for a fee. Normally that rate will be higher than other fixed rates when you convert.

* Rate may increase after settlement.

FHA Loans

FHA loans usually offer liberal qualifying criteria and require smaller down payments. Both fixed and adjustable loans are available. These loans are insured by the Federal Housing Administration and are offered directly to the homebuyer via many mortage companies.

VA Loans

Eligible veterans can get long-term loans with little or no down payment, more flexible qualifying standards, and, possibly, lower interest rates. These loans are made possible by the Department of Veterans Affairs. They are offered directly to the homebuyer via many mortgage companies.

First-Time Homebuyers

Mortgage companies have a wide variety of mortgage loans created by national organizations such as Fannie Mae or Freddie Mac, as well as state-wide bond programs like UHFA (Utah Housing Finance Agency) providing funding for households that meet certain income and/or residential qualifications. These loans offer the benefit of a low down payment and a low interest rate.

If you have good credit, but have difficulty with the requirements of standard mortgages, ask Brady Pierce about special first-time homebuyer financing and education programs.

Bridge Loan

Mortgage companies have a wide variety of mortgage loans created for individuals that want to purchase their next home before selling their current home. This type of program is not for everyone and could be risky in the event your home does not sell -- so it is important to have your home marketed at the right price. Bridge loan programs usually require that your home be listed with a real estate agent.

Refinancing Your Home

First, let's clarify what refinancing means. Refinancing is not a process of changing or adjusting your existing mortgage. It's the process of taking out a new mortgage and using the money to pay off your current mortgage.

To refinance is to start the loan process over, which means you will be asked to make an application and then undergo a credit check, title search, appraisal, inspection and so on. You will incur closing costs just like the first time around. Depending on your situation, a large portion of these costs can be wrapped into the mortgage, so you don't have to lay out a lot of cash up front. 5 Reasons to Consider Refinancing...

Interest rates have dropped below your current mortgage rate and you want to lower your monthly payment. Keep in mind, if you plan to stay in your home for a relatively long time, the decrease in your monthly payment will help offset the costs associated with refinancing.

You want to lower the total costs of your loan by reducing the term. For example, if your current mortgage rate is 10.25% for 30 years and you refinanced at 8.25% for 15 years, your monthly payments might increase a small amount, but you would save tens of thousands of dollars on total interest over the course of the mortgage.

You have an Adjustable Rate Mortgage (ARM) that is about to go up and you want to lock-in at a fixed rate. (Some ARMs come with a no-charge, lock-in feature; if yours doesn't, you may have to refinance to get a fixed rate.)

You want an Adjustable Rate Mortgage (ARM) with better features than your current loan. Know the caps (limits) on the amount your interest rate or monthly payments can increase. You should also look at the indices that determine your overall rate. As the mortgage market changes, is may be time to move to an ARM with more flexible features.

You want to consolidate debt. If you have built enough equity in your home, you might want to combine a home equity loan with your original mortgage and have one manageable payment. Or you might want to wipe out some other higher-interest debt, such as credit and charge card balances or installment loans.

Construction Loans

A construction loan offers significant advantages when you're planning to build your dream home. Why? Because many construction loans automatically convert to being your mortgage when construction is complete, giving you one closing and less complicated paperwork.

You can also choose from very competitive fixed or variable rates. And you can finance usually up to 90% of the appraised value (with private mortgage insurance). What's more, our loan can save you money since you pay interest only on the money you use as construction progresses.