Initial monthly payments are low and increase over a five to ten year period. Good if you expect your income to increase over a period of years. Term of loan fixed for fifteen to thirty years. Interest rate can be fixed or adjusted. Buyer qualifies at first year lower interest which is usually three percent below the rate of the loan.
Additional payment goes toward principal.
Loan is paid off in twelve to 18 years. These mortgages require minimum down payments, no prepayment penalties, full assumption privileges, easier qualification and various financing packages to mold the loan to the buyer. Veterans can qualify for a Veterans Administration loan. Loan features low or no down payments, assumability and no prepayment penalties. Loan is characterized by interest rates that can be adjusted up or down according to an index of a lender's cost of funds.