There are many different types of mortgages. Which one is right for you? When reviewing your options, you should consider your current financial picture, how your finances might change in the future, how long you intend to remain in the home, and how comfortable you are with fluctuating mortgage payments.
What Kinds of Home Mortgages Does Chase Offer?
Fixed Rate Mortgages: Security and Stability
Fixed-rate mortgages remain the most popular type. With these loans, the interest rate is fixed for the life of the mortgage, so your monthly payments never change. You might consider a fixed-rate mortgage if you:
- Are on a limited or fixed income.
- Prefer a consistent payment schedule.
- Want the security of knowing that even if interest rates rise, your payments will remain the same.
30-Year Fixed-Rate Mortgages
Of all fixed-rate mortgages, the 30-year option offers the lowest monthly payments. That's because the loan matures over a longer period of time. If you think interest rates are likely to rise over the long term, this is a good option. Also, the low payments could help you qualify for a more expensive home.
15-Year Fixed-Rate Mortgage
With a 15-year option, you own your home in half the time by paying more each month. In return for higher monthly payments, you acquire equity faster and end up paying substantially less interest over the life of the loan.
Adjustable Rate Mortgages: Flexibility and Control
Adjustable rate mortgages (ARMs) generally start out with an interest rate lower than a fixed-rate loan. This saves you money early on, and may help you qualify for a more expensive home. However, your rate is tied to a market index. As the index goes up or down, your payments will also change at each scheduled adjustment period. To protect you in times of extreme rate fluctuation, there are ceilings, or "rate caps", on the amount the interest rate can rise or fall at each adjustment period. Chase also includes a maximum interest rate for your ARM loan, known as the "lifetime cap". You might consider an adjustable rate mortgage if you:
- Plan to stay in your home for only a short time.
- Want lower initial payments.
- Have a small income but expect to earn more in the future.
- Are confident you can handle future rate increases.
These mortgages maintain an initial interest rate for 1, 3, 5, 7, or 10 years, and can be adjusted every year thereafter based on the applicable index.
Interest Only Mortgages: Lower Initial Monthly Payments
Interest only mortgages do not include any repayment of the principal portion of the loan for an agreed upon period of time - called the interest only period. This means that during that time, your monthly payment will consist only of interest. No portion of the payment will go toward the principal balance. At the end of the specified interest only period, your monthly payments will increase to reflect the full amortized amount owed to the lender for the remaining years of the loan. You might consider an interest only mortgage if you:
- Want to afford more home now.
- Know you will need to sell your home within a relatively short time period (maybe two to five years).
- Want a lower initial payment and have confidence that you can deal with a payment increase in the future.
Chase offers a variety of home financing options for customers with special considerations. These may include special credit needs, FHA or VA loans, low down payments options or affordable home loan programs. You might consider one of these special mortgage programs if you:
- Have non-traditional financing needs or have less than perfect credit.
- Qualify for an FHA or VA Loan.
- Need the low down payment options of affordable loans.
A missed payment won't necessarily keep you from getting the good credit you deserve. Our Mortgage Consultants will work with you to find the loan that meets your needs and fits your budget. .
The FHA insures mortgage loans to help people buy or refinance their current homes with a low down payment. The FHA does not actually make the loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan. Down payments on FHA loans can be as low as 3% down*.
VA mortgage loans are intended to encourage lenders to offer veterans mortgages with more favorable terms. VA mortgages can be used to buy, build, improve, or refinance a home. These mortgages are often made without any down payment at all*, and frequently offer lower interest rates than are ordinarily available with other kinds of mortgages. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different from any other type of mortgage.
Chase offers several affordable mortgage programs with down payments as low as 3%*, and flexible qualifying guidelines. Our DreaMakersm Programs provide opportunities for closing cost assistance, and for most programs no cash reserves are required for single-family residences.
*Please note: for down payments of less than 20% on conventional loans, Mortgage Insurance (MI) is required and MI charges apply. Depending on down payment and Loan to Value, upfront and annual Mortgage Insurance premiums may apply on FHA loans. One time funding fee for loan guaranty may apply on VA loans.