Whether you are in the market to purchase a home or just refinance your existing mortgage, The First National Bank, with locations throughout Bucks County, offers Residential Mortgages at very competitive rates. And the interest you pay may be tax deductible—check with your tax advisor.
|Fixed Annual Percentage Rate||Term of Loan|
- At 3.75%, the payment for each $1000 borrowed over a period of 180 months is $7.28.
For a $100,000 loan at 3.75% for 180 months, the payment would be $727.23 per month.
- At 3.875%, the payment for each $1000 borrowed over a period of 240 months is $6.00.
For a $100,000 loan at 3.875% for 240 months, the payment would be $599.42 per month.
- At 3.99%, the payment for each $1000 borrowed over a period of 360 months is $4.77.
For a $100,000 loan at 3.99% for 360 months, the payment would be $476.84 per month.
One of the most prominent forms of a mortgage loan is the fixed-rate mortgage. Unlike the adjustable-rate mortgage, the fixed-rate mortgage lets homeowners know exactly what their payments will be during the length of the loan, which is generally 15 or 30 years.
Experts generally say that the fixed-rate mortgage is preferable to the adjustable-rate mortgage if interest rates are low at the time the mortgage is taken out, and if the owner expects to live in the house for several years or for the life of the loan.
The adjustable-rate mortgage (ARM) is geared to homeowners who want to start with relatively low monthly payments or are selling or relocating within five to ten years.
ARMs come with interest rates that fluctuate over the life of the loan. For the first year or the first three or ten years of the loan (depending on terms), ARMs begin with a relatively low interest rate tied to an index such as the federal government’s cost of funds index. That index varies from month to month according to economic indicators. On either the first-, third- or ten-year anniversary (depending on the agreement), the mortgage interest rate is reset based on fluctuations in the index.
Typically, the agreement states that at the maximum, the borrower’s interest rate can climb two percent in any one-year and six percent over the length of the loan. That maximum increase is known as the rate cap.
Because ARMs are usually fixed for one or three years, they appeal to owners who:
- Expect to live only a few years in their home
- Are involved in a bankruptcy
- Are buying a second home or investment property
How to Decide Between ARMs or Fixed-Rate
When weighing whether to refinance from an adjustable-rate to a fixed-rate mortgage, consider:
- How long you plan to stay in the home
- Current rates on your ARM and on fixed-rate mortgages
- When and how much the payment on your ARM may rise (rate increases are typically capped per adjustment period and over the life of the loan)
- Refinancing costs
- Any prepayment penalties
However the mortgage is shaped, any mortgage loan will require:
Appraisal – a professional appraiser inspects the appearance of the property and studies the condition of the neighborhood to determine the property’s value and ensure that the property is a safe investment.
Escrow – documents and money that are kept by a third party until contractual conditions are met by the parties involved in a sale of property.
Closing Costs (also known as settlement costs) – not included in the sale price; these are expenses that must be paid before title to the property is transferred to the new owner.
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