Mortgage Product Comparison

When purchasing a home, getting a mortgage is often the most stressful part of the process, especially for first-time homebuyers. Today, there are many different types of mortgage products, all with with their own advantages and disadvantages. As we have seen over the past couple of years, not understanding a mortgage home loan can lead a homeowner to make a decision that will negatively impact them for the rest of their lives.

So relax, take a deep breath, and let us help you decide what mortgage is best for you and help you find the best mortgage rate.

The table below, provides a basic overview of the some of the different types of mortgage products available.

Mortgage Product Description Advantage Disadvantage
Fixed Rate Conforming Mortgages Mortgage amount under $417,000, apart from Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the limit is $625,500 Fixed rate for the term of the loan. The mortgage payment will never increase.
  • Higher initial monthly payment than an adjustable rate mortgage.
  • If rates drop, holder must refinance to lower rates.
Fixed Rate Jumbo Mortgages Mortgage amount above $417,000, apart from Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the limit is $625,500 Fixed rate for the term of the loan. The mortgage payment will never increase.
  • Jumbo mortgages often have higher rates than a comforming mortgage of the same term.
  • Higher initial monthly payment than an adjustable rate mortgage.
  • If rates drop, holder must refinance to lower rates.
Hybrid Adjustable Rate Mortgages Mix of fix rate and adjustable rate loans. The interest rate is fixed for the first few years of these loans--for example, for 5 years in a 5/1 ARM.
  • Lower initial rate.
  • If rates go down after the fixed rate period expires, then the mortgage rate will also drop. No need to refinance.
  • If rates rise, you will have to pay more.
  • More complicated mortgage. You will need to understand adjustment period, rate index, rate caps, and more.
Interest Only ARMs You pay the interest only for a fixed period of years, usually 3 to 10 years. After fixed period, payments will increase and may also adjust based on interest rate changes.
  • Smaller monthly payments for initial interest free period.
  • Larger monthly payments after interest free period ends.
  • Not building any equity in house.
  • More complicated mortgage. You will need to understand adjustment period, rate index, rate caps, and more.
Payment Option ARMs An adjustable-rate mortgage that allows you to choose among several payment options each month. These include:
  • A traditional payment of interest and principal.
  • An interest only payment.
  • A minimum or limited payment that may be less than the amount of interest due that month. This difference is added to the principal of the loan and is included in future monthly payments.
  • Flexibility in how much you pay each month. Good if you have irregular income.
  • If full payments are not made, principal of the loan increases.
  • More complicated mortgage. You will need to understand adjustment period, rate index, rate caps, and more.
FHA Loans A loan that is backed by the FHA, Federal Housing Administration.
  • Buy a home with a down payment of as low as 3.5%.
  • Easier to use gifts as down payment and closing costs.
  • No prepayment penalty.
  • The loan may be assumable.
  • You'll need reasonable debt to income ratios and decent credit.
  • Limits to how much you can borrow. To see limits, click here.

Visit our Adjustable Rate Mortgages page to learn more about these types of loans.

Below are rates for purchase and refinance mortgages.

Purchase Mortgages

Refinance Mortgages