Types of Financing

When financing, you have many options to choose from. Here, I provide a short description of the different financing types.

Fixed Rate Amortized

• The rate never changes

• 15, 30 and 40 year terms

• A portion of the monthly payment reduces the balance

Fixed Rate Interest Only

• The Rate never changes

• 30 Year and 40 year terms

• Your monthly payment will not reduce your mortgage balance
  for the first 10 years, but will then be converted to an amortized loan
  for the remaining term

Adjustible Rate Mortgage (ARM)

• Usually expressed as 3/1, 5/1, 3/6 the first number is the number of years
  when the rate remains unchanged, the second number is how often the rate can change
  after the fixed period. 1 = once per year, 6 = every 6 months

• Can be amortized or Interest Only

• Historically gives you a lower interest rate initially, but you need to be very cautious
  about this mortgage because it can become unmanageable once the rate changes