Other Types of Fixed-Loan Products
Based on your long-term goals and income status, there are more targeted choices under the fixed-rate umbrella.
A biweekly (paid every two weeks) mortgage based on a thirty-year term pays off the loan faster and cuts the total amount of interest you'll pay. Essentially, the accelerated payment schedule means you make thirteen annual payments instead of twelve. It can cut the term of a typical thirty-year mortgage to a payoff time of between eighteen and twenty-two years.
Lenders typically charge you a fee of several hundred dollars to go biweekly, so why not determine the extra amount you would pay off through the program, divide by twelve, and just add that amount to each month's payment from now on? Same result, and you'll save money.
This mortgage can give borrowers the option of cutting their rate when rates drop by a specific amount (usually 2 or more points) during a specified time period in the life of the loan. This right to exercise a rate cut without needing to refinance means you might be paying more for this loan than you would for a similar-term fixed rate loan without this feature. Make sure you have a good idea whether this is in fact the cheaper option than simply refinancing when rates do come down.
This Fannie Mae program helps creditworthy borrowers who for some reason can't get a conventional loan. Conventional lenders loan money through the program in fifteen- and thirty-year mortgages. The program is available to borrowers who have no more than 100 percent of their community's median household income, though it's important to see whether specific income limits might be waived. Down payments for those who qualify may be as low as 3 percent, though borrowers will probably have to budget for mortgage insurance as part of their monthly mortgage expense.
