Types of Loans

At USA Mortgage, we understand that one size does not fit all. Therefore, our St. Louis mortgage lenders offer options to specifically fit your budget and lifestyle. Below are several types of loans to help you determine what may fit you best. If you still feel unsure or as though you have a list of unanswered questions, give us a call anytime at 314-546-4844. We would be more than happy to talk you through your loan options and how to get started with us.

30-Year Fixed Rate Mortgage The traditional 30-year fixed-rate mortgage has a constant interest rate and fixed monthly payments. In others words, these payments never change. If you plan to stay in your new home for seven years or longer, this may be a great option. It can be more difficult to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not much more expensive than adjustable-rate mortgages and may be a better deal in the long run due to being able to lock in the rate for the life of your loan.

15-Year Fixed Rate Mortgage This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan in addition to a lower interest rate—and you’ll own your home twice as fast. Note that a 15-year loan means a commitment to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates is not that significant.

Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM) These increasingly popular ARMS—also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a “5/1 loan” has a fixed monthly payment and interest rate for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It’s a great option for individuals who expect to move (or refinance) before or shortly after the adjustment occurs.

Adjustable Rate Mortgages (ARM) 
When it comes to ARMs there is one basic rule to remember: the longer you ask the lender to charge you a specific rate, the more expensive the loan becomes.

2/1 Buy-Down Mortgage 
The 2/1 Buy-Down Mortgage allows the borrower to qualify at below-market rates so they are able to borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another percent at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan’s term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, keeping the loan in place – even for three full years or more – will keep their average interest rate in line with the original market conditions.

Annual ARM
 This loan has a rate that is recalculated once a year.

Monthly ARM
 With this loan, the interest rate is recalculated every month. Compared to other options, the rate is usually lower on this ARM because the lender is only committing to a rate one month at a time.