If you’re looking to buy a home, it’s important to understand
the different types of available
mortgage loans. Here are the most common types of mortgages you will find these days:
Fixed-Rate Home Loan
When you enter into a
fixed-rate home loan, the interest rate stays the same for the entire term of the loan. The
amount of money is split into even payments throughout the life of the
loan. Because the interest rate does not change, borrowers who choose
a fixed-rate mortgage loan have the advantage of budgeting around a consistent
With an adjustable-rate mortgage, your interest fluctuates from year to
year. This fluctuation is based on a national index. Whereas in a fixed-rate
home loan, the lender assumes the risk by agreeing to one interest rate
in an ever-changing market, an adjustable rate mortgage transfers some
of that risk to the borrower. Because the rates are tied to a national
index, borrowers with adjustable-rate mortgages follow the market trends—for
better or worse.
Hybrid Adjustable-Rate Mortgages
A hybrid adjustable rate mortgage is a blend between a fixed-rate and an
adjustable-rate loan. In a hybrid adjustable-rate mortgage, the lender
agrees to fix the interest for a certain period of time. After the initial
fixed term of the loan, the loan resets and interest becomes adjustable.
The interest rate is then based on a national index and may include an
An interest-only loan is a loan where the borrower pays only the interest
on the loan for a set period of time. The principle of the loan does not
change during the initial interest-only time. At the end of the interest-only
period, the principle is then amortized for the remainder of the loan
period. Borrowers who choose this option are generally making a large
home purchase, and may expect to start making more money in the future.
Interest-only payments are usually considerably less than payments after
the loan is reset.
If you’re looking for a
home loan in Idaho, call Westmark Credit Union at (208) 523-1071 or (800) 574-5626.
Whether you are looking to buy a home, make improvements to an existing
home, or utilize your home’s equity for personal expenses, we have
loan options that are right for you.