One of the first decisions to make on a mortgage purchase is the product type. In today’s low interest rate environment, the 15-year fixed rate mortgage (FRM) has the lowest interest rate at 2.1%, followed by the 5/1 adjustable-rate mortgage (ARM) at 2.45%, and the 30-year FRM at 2.8%.
Determining which type of loan is right for you depends on your personal financial situation and prospects. The 15-year FRM is amortized over 180 months leading to higher monthly payments but lower lifetime interest expenses, while the 30-year FRM is amortized over 360 months resulting in lower monthly payments but higher lifetime interest expenses. An adjustable-rate mortgage, commonly known as ARM, is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. With an ARM, the initial interest rate is fixed for a period of time. After this initial period, the interest rate resets periodically, at yearly or even monthly intervals. 5/1 ARM has a 5-year time of fixed rate.
Pureloan provides a powerful tool to research mortgage rate trends for your personal situation. The interactive chart above displays comprehensive and accurate mortgage analyses based on your criteria. It not only shows mortgage rates of the top banks and different loan types, with the nationwide average as reference, but also ranks the loan popularity by bank and loan type.