Understanding Types of Mortgages

 There are different types of mortgage loans which are offered by various lenders as different products. Even if a product seems somewhat similar between mortgage lenders, the fees and mortgage costs associated with it may vary from one lender to another. Some of the most widely known products are described below:

    VA Mortgage: For active and retired Military Veterans.

    FHA Mortgage: Most popular loan type, a lower down payment required, (3.5% required).

    Conventional Mortgage:10% down payment required.

    VHDA: (Virginia Housing Development Authority) for first time home buyers only.

     Fixed Rate Mortgage

    A fixed rate mortgage is one where the interest rate does not change for the length of the loan. The loan is amortized over the length of the term and the per month mortgage payment is fixed. Note that there may be some variations in the mortgage payment but those may be a consequence of the real estate taxes or other components but not due to the loan itself.


       15 year Fixed Rate Mortgage

      The term for this fixed rate mortgage loan is 15 years. In other words the mortgage and interest has to be paid back in 15 years. The mortgage payment per month remains same all throughout the life of the loan.

       30 year Fixed Rate Mortgage

      The term for this fixed rate mortgage loan is 30 years i.e the mortgage and interest has to be paid back in 30 years. The mortgage payment per month remains same all throughout the life of the loan. The difference between this and the 15 year fixed rate mortgage (in addition to the difference in the number of years) is that the per month mortgage for 30 year fixed is less than the per month mortgage for 15 year fixed for the same mortgage amount. Lenders typically offer the 15 year fixed at a somewhat lower interest rate than the 30 year fixed.


     Adjustable-Rate Mortgage

    An ARM mortgage, as the name suggests has an adjustable rate against which the mortgage payments are calculated. As a result your mortgage payments may go up or down throughout the life of your loan. The rate against which your mortgage is calculated is based upon a published market index which in many cases is a One-Year treasury bond index or our favorite the Cost Of Funds Index (COFI). The interest rate that applies to you is the sum of such an index and a margin which is generally set during your loan application process. So, for example, if the index is 7.5% and your margin is 2.5% then your rate is 10.0%. This rate is adjusted by your mortgage lender at every pre-determined interval which is known as the Adjustment Interval. So, a One-year ARM is said to have an Adjustment interval of once every year. In addition to such periodic adjustments, it is possible that the very first adjustment may occur earlier or later than all the other adjustments. For instance a one-year ARM mortgage may have the very first initial adjustment after 2 years of your taking out the mortgage loan, followed by an adjustment every once a year. Your initial interest rate is determined at the begining of your loan process and may be different than the sum of the current index plus margin.

    In addition to the Initial Interest Rate, Index, Margin and Adjustment Interval, your mortgage lender may also offer an Interest rate cap and Periodic Interest Rate cap. These upper limit caps protect you against high interest rates for the life of the loan which means that your interest rate would not exceed this cap, even if the sum of margin plus index exceeds these limits.

    Convertible to Fixed Rate ARM: This is an optional feature offered by the lender which enables you to convert your ARM to a Fixed rate mortgage loan after some time has elapsed. This option may be useful for those who want to stabilize their mortgage payments to a fixed amount after some time of adjustments. The rules for converting differ between lenders and therefore it is important that you understand these options as offered by your lender.

A.J. Williamson  is the sole owner of the information collected on this site. Neither A.J. Williamson  nor the team associates will sell, share, or rent this confidential information to others. Your privacy is the primary concern  for A.J. Williamson. 

By submitting personal information such as name, address, phone number, email address and  additional data, the real estate client/prospect consents that A.J. Williamson and his  authorized representative may contact client/prospect by phone, U.S. Postal Service, or e-mail whether or not client/prospect is participating in a state or federal or other "do not contact" program of any type.

ALL MLS real estate listingsE-mail,  Government  HomesOur SchoolsAbout  AJChoosing a RealtorSelling a HomeBuying a Home, Home

Realtor! Graduate of Realtor Inst. Multiple Listing Service  



A.J. Williamson

Assoc. Broker, GRI, Realtor

Direct:(757) 639-3222




RE/MAX Alliance

 4701 Columbus St. #200, VA Beach, VA 23462



"Let us come before His presence with thanksgiving..." Psalm 95:2

RE/MAXAlliance Real Estate
Each RE/MAX office is independently owned and operated.  This site is owned by and associate of RE/MAX Alliance for real estate information.  The content and views expressed herein may not be those of RE/MAX International, RE/MAX  Atlantic Region, or RE/MAX Alliance Realty.  RE/MAX Alliance  is an Equal Opportunity Employer and requires that its associates conform with all Fair Housing laws and regulations.

A.J. Williamson
Assoc. Broker, GRI, Realtor
Direct:(757) 639-3222    Office:(757)333-3366


A.J. Williamson real estate and homes features all available information presented in user friendly format about Virginia Beach, Chesapeake, Norfolk and Suffolk, Real Estate Virginia Beach Virginia New Homes Chesapeake and Virginia Beach Virginia New Resale homes Virginia Beach and Chesapeake Real Estate Norfolk new homes real estate Suffolk new homes real estate Hampton Roads new homes real estate Custom new homes Virginia Beach, Chesapeake, Norfolk Luxury new homes Real Estate Investment including Great Neck Virginia Beach, Kempsville Virginia Beach homes, Ocean View Norfolk homes, Ghent Norfolk, Greenbrier Chesapeake real estate, Hickory Chesapeake real estate, Great Bridge Chesapeake real estate.