State and Local Housing Program

Many state, county and local government programs offer financing for qualifying low-to-moderate income families wishing to purchase their first home. Loan assistance programs like Mortgage Credit Certificate (MCC) offer a partial tax credit for interest on the loan.

These programs typically offer:

• More relaxed qualifying guidelines
• Lower upfront fees
• Lower interest rate
• Fixed rate

Fixed Rate Mortgage

With a fixed rate mortgage, the interest rate does not change for the term of the loan, so the monthly payment is always the same. Typically, the shorter the loan period, the more attractive the interest rate will be.

Payments on fixed-rate fully amortizing loans are calculated so that the loan is paid in full at the end of the term. In the early amortization period of the mortgage, a large percentage of the monthly payment pays the interest on the loan. As the mortgage is paid down, more of the monthly payment is applied toward the principal.

30 Year Fixed Rate Mortgage

A 30 year fixed rate mortgage is the most popular type of loan when borrowers are able to lock into a low rate.

Benefits:

• Lower monthly payments than a 15 year fixed rate mortgage
• Interest rate does not go up if interest rates go up
• Payment does not go up, it stays the same for 30 years

Drawbacks:

• Higher interest rate than a 15 year fixed rate mortgage
• Interest rate stays the same even if interest rates go down

15 Year Fixed Rate Mortgage

A 15 year fixed rate mortgage allows you to pay off your loan quicker and lock into an attractive lower interest rate.

Benefits:

• Lower interest rate
• Build equity faster
• If interest rates go up, yours is fixed

Drawbacks:

• Higher monthly payment stays the same if interest rates go down
• Interest rate stays the same even if interest rates go down