Conventional Loans

No matter the specifics of your situation, Great Northern Mortgage can help you determine whether a conventional mortgage will help you meet your goals and give you the financial security you need.

Fixed Rate Mortgages

A fixed rate mortgage guarantees you an interest rate that stays the same from the time you close on your mortgage until you make your final payment. This keeps your monthly payments consistent and makes your budgeting simpler.

Fixed rate mortgages are a good option if you plan to live in one place for many years. Your interest rate won’t be affected by market fluctuations, so your monthly payments won’t change. If market rates do decrease during the life of your loan, you may be able to refinance your loan in order to take advantage of this and save money. Fixed rate mortgages are available in terms ranging from 10-30 years.

Fixed Rate Advantages:

Your interest rate and monthly payments won’t increase, regardless of the market

You may be able to refinance to take advantage of decreases in market rates

Fixed Rate Disadvantages:

Your initial rate may be higher than what you’d get with an adjustable rate mortgage, resulting in higher monthly payments

Your interest rate doesn’t automatically decrease just because market rates have, other factors apply

Eligibility

In order to qualify for a fixed rate mortgage, you must have sufficient income and a strong enough credit history to demonstrate that you will be able to repay your loan.

Adjustable Rate Mortgages (ARM)

An adjustable rate mortgage is a great way to save money on a loan, particularly if you don’t anticipate living in one place for more than a few years. ARMs are available in a number of configurations that determine how and when the interest rate may change. For example, a 3/1 ARM will have a fixed rate for the first three years, and then will be adjusted once yearly every subsequent year. Rates may increase or decrease during adjustment periods, which will impact your monthly payments. Caps can be set to protect you against rate increases.

Adjustable Rate Advantages:

Your initial rate may be lower than what you’d get with a fixed rate mortgage, resulting in lower monthly payments

You may be able to refinance to take advantage of decreases in market rates

Adjustable Rate Disadvantages:

Your interest rate doesn’t automatically decrease just because market rates have, other factors apply

Your interest rate and monthly payments may increase after the initial fixed term, depending on the market

How long you plan to live in a home is a major consideration when choosing between a fixed or adjustable rate. In general, the longer you plan to live in a home, the more you should lean toward choosing a fixed rate mortgage.