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Conventional Refinance Loans

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

Fixed Rate Mortgages

The benefit of a fixed-rate mortgage is that your interest rate and payments don’t change during the life of the loan. You will not experience unexpected changes in your interest rate. Fixed rate mortgages are available in term lengths ranging from 10-30 years

Fixed Rate Advantages:

  • Your interest rate won’t increase, regardless of the market
  • Your monthly payment won’t change

Fixed Rate Disadvantages:

  • Your initial rate may be higher than what you’d get with an adjustable rate mortgage
  • Your monthly payments may be higher than with an ARM
  • Your interest rate doesn’t decrease when market rates have

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 with a fixed rate mortgage
  • Your interest rate may decrease with market rates, as may your monthly payment
  • You can set caps on rate increases and payments

Adjustable Rate Disadvantages:

  • Your rate may increase alongside market rates, as may your monthly payment
  • Payment caps may lead to negative amortization (payments will not cover loan interest)

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.