Types of Loans
There are many types of mortgage programs
available. The right type of loan for you depends upon many
- Your current
- How you expect
your finances to change in the future
- How long you intend
to keep your house
- Your preferences regarding fixed versus
For example, a 15-year fixed rate mortgage
can save you many thousands of dollars in interest payments
over the life of
the loan, but your monthly payments will be higher
than a 30-year mortgage. An adjustable rate mortgage
a lower monthly payment than a fixed rate mortgage,
but your payments could increase when the interest
Use this section to learn about fixed rate
mortgages and adjustable rate mortgages , but before you
make a decision,
be sure to
discuss your finances, your plans and financial
prospects, and your preferences openly and honestly
Back Bay loan professional. This will ensure
you get the
best loan for
Fixed Rate Mortgages
These feature a fixed interest rate for the life of your loan,
so your monthly payments (principal and interest) will always
be the same. Most homebuyers choose 15- or 30-year fixed rate
loans, although 10- and 20- year loans are also available.
These are usually your best choice when interest rates are
low and you plan to stay in your home for at least five years.
Back Bay’s array of fixed rate mortgages include
home loans for a variety of potential homebuyers. These include:
- Low and no down payment programs: these are often ideal
for first-time buyers and buyers who have not saved a large
down payment, but prefer to buy a home and begin building
- Government programs: home loans that are sponsored by the
FHA (Federal Housing Authority) and VA (Veteran’s Administration).
- Jumbo loan programs: loans for homes over $320,000.
- New construction programs: we offer both lot loans and
combination building and construction loans (One-Time Close).
- Second mortgages: these are often combined with first mortgages
to eliminate the need for private mortgage insurance (PMI).
- Equity-based loans: these enable existing homeowners to
tap into the current equity in their homes, which is the
amount of the original mortgage that has been paid plus any
increases in appraised value. (Some states prohibit or restrict
equity-based loans and lines of credit. Please check with
your Back Bay loan professional before you apply.)
These are just a few of our innovative fixed rate mortgages.
Please ask your Back Bay loan professional for details
of other loans offered.
Adjustable Rate Mortgages
Also called ARMs, adjustable rate mortgages have a unique
interest rate feature that changes, or adjusts, over the life
of the loan. An ARM may be attractive to you if you desire
a slightly lower interest rate during the initial stages of
owning your home, if you expect that your income will rise
in the future, and/or if you are not planning to stay in the
same home for long. Also, an ARM may have an initial interest
rate lower than a fixed rate loan.
Depending on your loan’s requirements, your initial
payments will be at a fixed interest rate. Afterwards, your
interest rate will be adjusted by adding a pre-determined margin
to a specific index like Treasury bills or COFI (Cost of Funds
Index). ARMs are generally referred to as 1/1, 3/1, 5/1, and/or
7/1 - this means that the initial fixed interest rate period
is for 1, 3, 5, or 7 years, respectively, and then the rate
is adjusted every year for the life of the loan. In addition
to the adjustment period (3/1, 5/1, and/or 7/1), there are
other types of ARMs, including:
- FHA ARMs : these loans are insured by the Federal Housing
Authority (FHA) and are popular with first-time buyers
as they feature flexible down payment and credit requirements.
- Jumbo ARMs : these specific adjustable rate programs are
designed for homes priced $320,000 to over a million dollars.
- Construction Mortgages : we offer both lot loans and combination
building and construction loans (One-Time Close).
- Home Equity Lines of Credit (HELOC)
: these variable rate
loans allow homeowners to tap into the equity they’ve
invested in their homes. Unlike an adjustable rate mortgage,
your interest rate may change more often than a typical
ARM. (Some states prohibit or restrict equity-based loans
of credit. Please check with your Back Bay loan professional
before you apply.)
- Interest Only ARMs : these variable rate loans have an
interest only payment for a fixed period over the life of
Back Bay offers many more ARM programs, so check with
your loan professional for details.