Conventional Loans
Most conventional mortgages have either fixed or
adjustable interest rates.
- Typical fixed interest rate loans have a term of 15 or 30 years. A shorter-term loan usually results in a lower interest rate.
- Adjustable-rate mortgages, or ARMs, fluctuate in relation to the rate of a standard financial index, such as the LIBOR. Monthly payments can go up or down accordingly.
- If the borrower provides a down payment less than 20% of the sales price, private mortgage insurance (PMI) will be required. PMI is typically either a monthly or one time premium that is paid to protect the lender in instances where the borrower defaults. With a down payment of 20% or more, no PMI is required.
