Two of the most common government-backed mortgages are: Because of that, these mortgages usually require lower down payments. Government-backed loans give some assurance to the lender that they'll be repaid even if you default on the loan. ![]() Contact your mortgage servicer for more information. You can request to remove the PMI when your loan balance drops to 80% of the home's original appraised value. This insurance protects the lender if a borrower defaults on their payments. Since the government isn't involved in backing conventional loans, lenders may have more flexibility in setting the terms.Ī conventional loan requires you to pay for private mortgage insurance, or PMI, if your down payment is less than 20% of the home's appraised value. In addition to being categorized as fixed or adjustable, mortgages can be classified as either conventional or government-backed. However, if you don't plan on keeping the home longer than the fixed period, you might see significant savings with an ARM product. Your monthly payment could be significantly higher than if you'd chosen a fixed-rate mortgage. The trade-off is that you don't know how much you'll pay after the adjustments start. Lenders give ARMs labels indicating how long the initial rate is guaranteed and how often the rate is adjusted after that.ĪRMs usually have lower initial interest rates and payments than fixed-rate mortgages. A periodic rate cap limits how much the rate can change in a year, while a lifetime cap limits the total increase over the life of your mortgage. ARMs usually have caps that limit their increases. Then, they adjust, often yearly, based on changes in the market. With an adjustable-rate mortgage, or ARM, the interest rate and payment stay the same for an initial period of years. That means your principal and interest payment remains the same for the length of the loan. ![]() Fixed or adjustable rate mortgageĪ fixed-rate mortgage has an interest rate that's locked in for the full term of the mortgage. Fortunately, it gets much simpler when you understand the basic ways of categorizing mortgages. To learn more about relationship-based ads, online behavioral advertising and our privacy practices, please review Bank of America Online Privacy Notice and our Online Privacy FAQs.When you're getting ready to finance a home purchase, all the mortgage choices and terms can be a little confusing. These ads are based on your specific account relationships with us. In addition, financial advisors/Client Managers may continue to use information collected online to provide product and service information in accordance with account agreements.Īlso, if you opt out of online behavioral advertising, you may still see ads when you log in to your account, for example through Online Banking or MyMerrill. If you opt out, though, you may still receive generic advertising. If you prefer that we do not use this information, you may opt out of online behavioral advertising. ![]() This information may be used to deliver advertising on our Sites and offline (for example, by phone, email and direct mail) that's customized to meet specific interests you may have. Here's how it works: We gather information about your online activities, such as the searches you conduct on our Sites and the pages you visit. Relationship-based ads and online behavioral advertising help us do that. We strive to provide you with information about products and services you might find interesting and useful. Please contact a Home Equity Specialist at 800.284.6302 for more details. Note, on certain refinance transactions we may lend up to 100% of the total equity in your home.
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