Lower My Rate

When enquiring about getting a lower rate, a good thing to realize is the difference between a Fixed rate and an ARM rate. Read below to find out more about how to lower your rate by changing loan programs. Are you interested to see if there is a better rate available for the loan program you have now? Click here to find out if you can qualify for a better rate and start saving money!

Fixed mortgage

A fixed mortgage keeps your monthly principal and interest payment the same for a fixed term. Although the usual term is 30 years, 25, 20, 15 and now even a 40 year fixed periods are common. This type of loan is viewed as the most stable option for borrowers committed to paying off their home within a set timeframe. Some fixed loans fall into a government set loan amounts considered "conforming" which is currently $359,650 in California. A conforming loan meets requirements for eligible securitization by Fannie Mae or Freddie Mac. If your loan goes over this conforming ceiling or, does not meet their other requirements, it is considered "Jumbo" or just nonconforming. These loans will usually have different pricing and guidelines compared to conforming loans. A considerable amount of home purchase loans in California are considered Jumbo or nonconforming.

ARM

An Adjustable Rate Mortgage (ARM) starts with an initial fixed short-term rate for a specific time period (e.g. 2 years, 5 years, etc.) then becomes an adjustable rate. This new rate adjusts at specified intervals for the continuing life of the loan, usually once a year but can change monthly with some mortgage programs. 3/1, 7/1, or 5/6 are examples of ARM programs. The first number is the fixed time period and the second is the adjustment interval period. Although the rate is adjustable most ARM's have a periodic rate cap and a lifetime adjustment cap. A cap is a limit to the amount your interest rate can go up during a single period and for the life of the loan.

Fixed Vs. ARM

If you want to pay off your house get a fixed loan. If you're not sure you'll be in your house long enough to pay it off and would like to benefit from lower short-term rate then an ARM is better for you. When buying a house in California an ARM is often a good option to start with. This will allow you to get into the house at a lower monthly payment and give you time to become accustom to your monthly mortgage payment. In most situations if you qualify for an ARM you will also qualify for interest only ARM program which will substantially lower your monthly payment.

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