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30 Year Fixed Rate
20 Year Fixed Rate
15 Year Fixed Rate
1 Year Adjustable Rate
3 Year Adjustable Rate
5 Year Adjustable Rate
3/1 Adjustable Rate
5/1 Adjustable Rate
7/1 Adjustable Rate
10/1 Adjustable Rate
5/25 Balloon
7/23 Balloon
5/25 Two Step
7/23 Two Step
2/28 Adjustable Rate
3/27 Adjustable Rate

30 Year Fixed Rate

A 30 year fixed rate is probably the most popular loan program. Monthly payment is calculated based on the initial interest rate. The monthly payment does not change at any point throughout the 30 year life of the loan. Changing market conditions will have no bearing on your monthly payment, making the 30 year fixed rate the most conservative option.

Consider this loan if:

• you do not plan to move within 10 years
• you do not plan to refinance within 10 years
• you expect interest rates to go up
• you prefer knowing your payment won't change
• you don't foresee your income to increase significantly over the next several years

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20 Year Fixed Rate

Similar to the 30 year fixed rate mortgage, this program will also ensure your monthly payment will never change throughout the life of your loan. Your monthly payments, however, will be significantly higher than the 30 year mortgage, as you are now expected to fulfill your full loan payment within 20 years instead of 30.

Consider this loan if:

• you would like to pay off your loan more quickly
• if you expect to stay in your home through to your retirement and you will be retiring in fewer than 30 years
• you wish to start retirement without mortgage debt

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15 Year Fixed Rate

Similar to the 30 and 20 year fixed rate programs, the 15 year fixed rate is considered the most aggressive, as you will need to pay off your loan within a mere 15 years. Your monthly payments will stay fixed, however they will be significantly higher payments in order to meet the 15 year deadline.

Consider this loan if:

• you can afford the higher monthly payments
• you are willing to pay more money over a shorter period of time in order to own your home without debt as soon as possible
• you are close to retirement
• you would like to start retirement without mortgage debt

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1 Year Adjustable Rate

Considered more of a risky loan, this 30-year loan's rate changes every year on your loan anniversary. This means that your monthly payment will change from year to year. The rate change or adjustment is calculated based on the US bond market, most typically, the yield on the 1 Year US Treasury Bill.

Due to the higher risk of this loan, the borrower is rewarded with an initial rate that is significantly below market rates for 30-Year fixed rate mortgages. Even upon each anniversary when the loan adjusts, your new rates will typically be below the 30-year fixed rates being offered to new borrowers. During periods of time when interest rates continually rise, it is possible that you will pay much more for a 1-Year Adjustable than a 30-Year Fixed Rate Mortgage.

Consider this loan if:

• you need to qualify for the largest loan possible with your current income but you are certain that your income will increase significantly in the short term to cover any anticipated increases in rates over the next few years
• you will be able to financially afford an increase in your interest rate at the time of your first adjustment
• you are willing to take a chance on an ever-changing interest rate in exchange for a lower monthly payment initially

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3 Year Adjustable Rate

Similar to the 1 year adjustable rate, this 30-year loan rate and your monthly payment rate changes every 3 years. Each 3 years, your new rate is calculated according to a predetermined formula.

Considered fairly risky as your rate will change, it is still assumed to be less risky than the 1-year adjustable rate, because your rate will not change as often.

Consider this loan if:

• you are willing to accept a possible elevated interest rate in exchange for a lower initial rate that will not change for three years
• you expect to move or refinance in about three years
• you want to qualify for more money based on your current income and within the next 3 years expect your income to increase
• you plan to stay in your home longer than 3 years, and your income will be able to support this

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5 Year Adjustable Rate

This 30-year loan rate, as well as your monthly payment will fluctuate every 5 years, based on a predetermined formula. This loan rate is considered less risky than both the 1-year and 3-year adjustable rate, as rates will not be reassessed for 5 years. This loan is considered a compromise between adjustable rate mortgages and fixed rate mortgages.

Consider this loan if:

• you expect to stay in your current home more than the initial 5 years
• you wish to keep your payments relatively low
• you are willing to accept the relatively small amount of interest rate risk in exchange for the benefit
• your income will be able to support a potential rise in your monthly rate in 5 years

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3/1 Adjustable Rate

This 30-year loan offers both a fixed and adjustable interest rate. You are offered a fixed interest rate for the first 3 years of the loan. The loan then changes into a 1-year adjustable rate mortgage for the final 27 years of the loan.

Consider this loan if:

• you want to maximize the amount of loan you qualify for and expect to stay in this home for more than 3 years
• you want the least expensive way to fix your monthly payment for the first 3 years of your loan and are willing to take some risk after the 3 year initial period
• you if you are concerned that your income in three years may not cover your monthly payment after your first adjustment

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5/1 Adjustable Rate

With a fixed interest rate for the first 5 years, this 30-year loan then turns into a 1-year adjustable rate mortgage for the remaining 25 years of the loan.

Consider this loan if:

• you fit the profile for the 3/1 Adjustable Mortgage but wish to trade off a higher initial rate for the security of a longer initial fixed period
• you want the least expensive way to fix your monthly payment for the first 5 years of your loan and are willing to take some risk after the 5 year initial period

Note:If you are certain you will only remain in this home for less than the initial 5 years, consider the 5/25 Balloon Mortgage instead

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7/1 Adjustable Rate

This 30-year loan offers a fixed interest rate for the first 7 years. The remaining 23 years of the loan are calculated based on a 1-year adjustable rate mortgage.

Consider this loan if:

• you plan to remain in this home at least the initial seven years but most likely will remain longer

Note: If you are certain you will only remain in this home for less than the initial seven years, consider the 7/23 Balloon Mortgage instead

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10/1 Adjustable Rate

This 30-year loan offers a fixed interest rate for the first 10 years. Your loan then turns into a 1-year adjustable rate mortgage for the remaining 20 years.

Consider this loan if:

• you plan to remain in this home at least for ten years, but consider it likely that you will stay longer
• you wish to have a long period of fixed monthly payments, but still wish to have some savings over the 30-Year Fixed Rate Mortgage

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5/25 Balloon

Monthly payment is calculated as if you will pay off the loan over 30 years, however, this loan requires that you completely pay your remaining balance in a single payment after 5 years. Unlike the 5-Year Adjustable, 5/1 Adjustable, and 5/25 Two-step programs, the borrower often enjoys a lower interest rate because the borrower is not obliging the lender to extend credit beyond the initial fixed period.

Consider this loan if:

• you will sell your home or refinance on or before the balloon payment date
• you are a temporarily relocated worker or are certain you will not stay in your new home beyond the initial 5-year period.

Note: Some balloon programs offer the borrower a Conditional Right to Reset, which effectively provides for an extension beyond the initial fixed period.

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7/23 Balloon

This is a similar, but longer version of the 5/25 Balloon Mortgage. Your monthly payment is determined by a 30-year amortization schedule, but you are required to pay off your outstanding balance after 7 years.

Consider this loan if:

• you are certain you will be moving or refinancing on or before the 7-year deadline and you wish to have the security of a fixed payment amount during this period

Note: Some balloon programs offer the borrower a Conditional Right to Reset, which effectively provides for an extension beyond the initial fixed period.

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5/25 Two Step

This 30-year mortgage offers an initial 5-year fixed rate, after which the rate is adjusted once for the remaining 25 years of the loan.

Consider this loan if:

• you expect to remain in the home for at least five years, but consider it a possibility that you could remain much longer
• you expect to be able to afford your post-adjustment monthly payment

Note: If you are certain that you will be moving or refinancing within five years, you could consider the 5/25 Balloon program, but only if there is a significant monthly savings.

Note: This Loan is not known to be available in a Jumbo program.

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7/23 Two Step

This 30-year mortgage offers an initial 7-year fixed rate, after which, the rate is adjusted once during the remaining 23 year life of the loan.

Consider this loan if:

• you expect to remain in the home for at least seven years, but consider it a possibility that you could remain much longer
• you are comfortable with the prospect of a future rate adjustment

Note: If you are certain that you will be moving or refinancing within seven years, you could consider the 7/23 Balloon program, but only if there is a significant monthly savings.

Note: This Loan is not known to be available in a Jumbo program.

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2/28 Adjustable Rate

This program is a 30-year adjustable program, except that the first adjustment does not occur until 2 years into the loan. After the initial 2 years, adjustments are typically made every 6 months, although some 2/28 loans may adjust every year depending on the terms of your loan.

Consider this loan if:

• you have less-than-perfect credit
• you can improve your credit rating within 2 years, at which point the borrower may refinance at a better rate

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3/27 Adjustable Rate

This program is a 30-year adjustable program, except that the first adjustment does not occur until 3 years into the loan. After the initial 3 years, adjustments are typically made every 6 months, although some 3/27 loans may adjust every year depending on the terms of your loan.

Consider this loan if:

• you have less-than-perfect credit
• you can improve your credit rating within 2 years, at which point the borrower may refinance at a better rate

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Sunset Mortgage Company
"Financing Your American Dream"
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Phone: (813) 264-9914 | Toll-Free: (800) 507-5155 | Mobile: (813) 966-0946
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