To get you started and prepared for your mortgage acquisition, we have provided important information to make applying for your mortgage much easier. For more information regarding our mortgage programs, please contact a Loan Officer or call 773.761.4300.

Fixed Rate Mortgages
The major advantage of a fixed rate mortgage is that it presents predictable housing costs for the life of the loan. Some fixed rate mortgages are:

30 year fixed rate mortgage
15 year fixed rate mortgage

In spite of the many options in a fixed rate mortgage, the 30 year fixed rate may still be the best one for you. It offers the lowest monthly payments of fixed rate loans while providing a never-changing monthly principal and interest payment schedule.

Adjustable Rate Mortgages (ARM)
The adjustable rate mortgage came about during a time of high interest rates that kept many people out of the housing market. The ARMs offered lower "initial rates" by sharing the future risk of higher rates between Borrower and Lender.

ARMs can be an excellent choice of financing under certain conditions, such as rising income expectations, high interest rates and short-term ownership. But because payments and interest rates increase, either steadily or irregularly, home buyers considering this kind of mortgage, need to have the income to keep up with all possible rate and/or payment changes.

Some ARMs have fixed rate conversion options. This option allows the Borrower to make his variable rate loan become a fixed rate loan. There is usually a fee required for the conversion. The conversion rate may be higher than the prevailing ARM rate to compensate the Lender for the risk it takes in regard to market rates going up.

ARM Interest Rate
Initial ARM rates will usually be lower than fixed rate loans (usually one to three percentage points lower) and will vary depending on the length of the first adjustment period. Lower initial interest rates also make ARMs somewhat easier to qualify for. The future interest rates are tied to certain economic indices that dictate in part what the monthly payment will be.

Adjustment Interval
The time between changes in the interest rate and/or monthly payment; changes typically one, three, five or seven years depending on what program is selected.

Index
Economic indicator in which the Lender establishes their base rate before the margin is added. The most popular index is based on the rate of return on a one-year Treasury Bill (T-Bill).

Margin
The additional amount the Lender adds to the index to calculate the new interest rate on an ARM. The margin is usually 2.5% to 3.0%

For more information on our mortgage program, please see a Loan Officer or call us at 773.761.4300.