There are two kinds of conventional loans. One is a fixed-rate mortgage and the other is an adjustable-rate mortgage.
A fixed-rate mortgage is best if you’re planning on owning your home for at least seven years. The total amount of your principal plus interest will not increase as long as you have the loan.
Here are some additional benefits of a Fixed-Rate Mortgage with Armed Forces Bank:
- Rate protection - your rate stays the same even if mortgage rates go up.
- Payment stability - you will always know what your monthly payment will be.
- Budgeting ease - budgeting your mortgage expense is easier because your payment does not fluctuate.
- Earlier pay off - even with a fixed rate, you can make extra payments to pay off your loan sooner.
An adjustable-rate mortgage is a loan with an interest rate that may fluctuate over time but only after an initial "fixed" period (typically five or seven years).
Here are some additional benefits of an Adjustable-Rate Mortgage with Armed Forces Bank:
- Lower rates - during the fixed period, the interest rate is often lower than for other loans.
- Lower payments - when your interest rate is low, your payments will be lower too.
- Lower cost - if you are planning to own your home for only 5 to 7 years, this option keeps your payment lower for the initial term of the loan.
- Rate caps - control how much your rate can increase.
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