6
month ARM
12 month ARM |
Six and twelve
month ARMs can significantly lower a mortgage payment for six
or twelve months. That can be enough time to catch up on other
debt payments and improve your credit rating. |
Six and twelve
month ARMs can become expensive after the initial six or twelve
month introductory period. Chances are, you'll want to improve
your credit and obtain a better loan. |
2 year fixed
3 year fixed |
Two and three
year fixed rate mortgages provide the security of a fixed loan
payment and relatively low, fixed interest rate for the first
two or three years. For most people trying to improve their credit,
two to three years is plenty of time. After two or three years,
these loans
convert to ARM loans. |
Two and three
year fixed rate mortgages convert to ARM loans at the end of
the fixed rate period. Rates on ARMs can increase. Chances
are, you'll want to improve your credit and obtain a different
loan before the two or three years are up. |
15 year fixed
30 year fixed |
Fixed monthly
payment and rate protect against interest and monthly payment
increases |
Higher interest
rate compared to ARM introductory rates
Higher rate compared to two and three year, fixed rate loans
Fifteen and thirty year loans should generally be obtained if
you plan not to move or refinance in the foreseeable future.
If you're trying to improve your credit in anticipation of refinancing
for a lower-rate loan, consider avoiding these loans. |
