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Types of Loans

Twenty &Thirty-Year Fixed Rate Mortgage
The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

Ten & Fifteen-Year Fixed Rate Mortgage
These loans are fully amortized over a 10 or 15-year period and feature constant monthly payments. They offer all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that, with a 10 or 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in less years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.

Hybrid ARM-Adjustable Rate Mortgage
Also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.

Somerset Trust Company NMLS #177545
151 W Main Street, Somerset, PA  15501
Toll Free:  (800) 972-1651
onlinemortgageapplications@somersettrust.com
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Member FDIC, Equal Housing Lender
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