The best loan can either be the loan with the lowest total costs, least long-term monthly payment, the least initial monthly payment or the quickest equity build-up depending on your situation.
FIXED RATE MORTGAGES
These programs are typically either on a 15 year or 30 year amortization or repayment schedule. These programs provide the most security in the sense that the required monthly principal and interest payments will not change for the life of the loan. This is because the interest rate is fixed for the entire life of the loan.
ADJUSTABLE RATE MORTGAGE
All of ARM programs are based on a multiple year amortization. These loans are referred to as adjustable rate mortgages (ARM’s), because the interest rate will change or adjust on a predetermined schedule. ARM’s have an initial fixed period during which the interest rate will not change or adjust. After this initial period, the interest rate will change or adjust based on a market index plus a margin.