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Types of Loans

Refer to our Mortgage Rates page for payment information on all of the following except HELOCs.

Thirty-Year Fixed Rate Mortgage
The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

Fifteen-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, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit 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 isn't that great.

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 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 good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.

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

Home Equity Loan

This loan is fully amortized over a 10-year, 15-year or 20-year period and features constant monthly payments.  It allows for a one time lump-sum loan, with a fixed interest rate, to utilize the equity in the collateral to possibly finance major expenses such as home repairs, medical bills or college education.

Home Equity Line of Credit (HELOC)

This loan uses a line of credit to borrower sums that total no more than the credit limit, similar to a credit card.  It allows a borrower to utilize the equity in the collateral to possibly finance major expenses such as home repairs, medical bills or college education. HELOC funds can be borrowed during the “draw period” (10 years) and have a minimum monthly payment requirement of interest only.  The interest rate is variable and is based on the prime rate plus a margin.  The full amount owing is due at the end of the draw period according to a loan amortization schedule over a 20 year period.


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601 Woodland Square Loop SE, Lacey, WA  98503
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