A loan which has a fixed rate that remains constant over a specified period of time.
Fixed Rate Loan
A loan which has a flexible rate that can change, either upward or downward, at specific periods of time over the duration of the loan. The change in the interest rate is generally tied to a financial index, which the lender has no control.
Adjustable Rate Loan (ARM)
A fixed rate loan that is amortized over a 30 year period, but becomes due and payable at the end of a shorter term (i.e., 5, 6,7,10 years).. Some of these loans have an option to be extended with a new rate or rolled into another type of loan.
Balloon Payment Loan
This is a loan which has a fixed rate for 5 years and then becomes an adjustable rate for the remaining term.
5/1 Adjustable Loan
FHA Loans are available as a fixed rate, ARM, GPM or buydown. They are loans that are insured by the Federal Housing Administration and offer low down payments and lower income requirements.
A fixed rate loan which has payments starting lower than the payments on a standard fixed rate loan, then increasing by a predetermined amount each year for a specific number of years (usually five).
Graduated Payment Mortgage (GPM)
This is the costs to get a lower interest rate on a loan. If the current rates are 5%, but you want or need a lower rate, you can elect to pay a fee to get the lower rate. This fee is calculated as a percentage of the loan.