The reason why 15, 20 and 30 year Fixed-rate Mortgages are so popular is because the interest rate remains fixed for the duration of the loan. This gives the borrower the piece of mind that he or she can pay for the loan without the worry of an increased payment. Even though the interest rate is typically higher than competing adjustable rates, they are still the most common loan type used by borrowers.

Adjustable Rate Mortgages or “ARMS” come in many varieties to meet specific home owners needs.

Convertible ARMS – allow you to go from an adjustable rate to a fixed rate once specific criteria has been met.

3/1, 5/1, 7/1, & 10/1 ARMS – Are a fixed rate for 3, 5, 7, or 10 years and then adjust once a year after the initial period is over.

3/6, 5/6, 7/6, & 10/6 ARMS- Are a fixed rate for 3, 5, 7, or 10 years and then adjust every six months after the intial period.

Lender Margins- On an adjustable rate mortgage the intrest rate the home owner is paying is determined by adding a specific amount of interest , known as “the margin” added to the current interest rate of the index.

CMT-indexed ARMs use the Constant Maturity Treasury Index to determine the interest rates on this type of home loan.

LIBOR ARMS also come in a wide variety to meet specific home owners needs. The rates on these loans are calculated using the current London Interbank Offered Rate.

5-year and 7-year balloon/reset mortgages are types of home loans that are usually based on a 30-year payment plan; however, the borrower is only given either 5 years or 7-years to repay the mortgage. For this reason, this is intended for financially savvy borrowers who can then choose to extend the repayment term when the end of term is reached. Borrowers who usually don’t plan to stay in their home longer than five or seven years can also benefit from 5-year and 7-year balloon/reset mortgages.

This option is typically used by borrowers looking to put less money down without having to pay for private mortgage insurance (PMI). Programs like an 80/15 where a first mortgage covers 80%, a second mortgage covers 15%, and the homeowner puts 5% down are very typical.

Affordable Merit Rate® Mortgages offers incentives rate reduction for payments that are on time. The Affordable Merit Rate® Mortgages is a mortgage that is perfect for the borrower with a bad or just fair credit history.

Freddie Mac has been providing lenders and borrowers with various types of mortgage offers that can fit everyone’s needs. One of these is the Freddie Mac Alt 97 Mortgage plan. This mortgage program is defined by its flexible down payment options for the borrower.

A-minus Mortgages, very similar to the Affordable Merit Range Mortgage plan, this is a mortgage plan for those who had a little trouble with their credit history. This mortgage plan offers a debt-payment-to-income-ratio. The mortgage plan offers various down payment options to fit one’s needs. The purchase types are purchase, cash out refinances and no cash out refinances.

A temporary subsidy buydown plans can allow you to pay a lower initial payment and have payment increase over time. Mortgages with temporary subsidy buydown plans may only be used for purchase transactions and cover primary residences that have anywhere between one to four units and they also cover second homes.