Mortgage trends are shaped by the economy, the local marketplace, and the buying power of the individual borrower.

Loans can have a fixed rate of interest for the life of the loan, a variable/adjustable rate of interest, or some combination of the two. When interest rates are extremely low, borrowers tend to “lock in” a low rate by selecting a fixed-rate mortgage. Adjustable-rate mortgages (ARM) may offer a starting interest below the current fixed rate. This may be attractive when rates are higher, or when the borrower needs to bring their monthly payment down.

However, when the Federal Reserve changes the interest rate, the interest on ARMs usually follows (up or down), and the borrower’s monthly payments will reflect that change. Some “hybrid” ARMs have an initial period, for example 10 years, when the rate is fixed.

Loan payback terms can also vary, from the standard 30-year, to 15-year, or other time frame that is most suitable to the borrower.

Today, in an effort to make housing more affordable (by lowering monthly payments), some lenders are even extending their repayment period to 40 years.

As the price of real estate continues to rise, lenders become more creative with their financing options. There are literally hundreds of loans to choose from every day. If you would like to talk about your financing needs and options, please give me a call.