Mortgage Type For people who... Loan Characteristics 30 Year Fixed Rate Morgage Plan to live in property more than 10 years and like Total Payment Stability Interest rate & monthly payment remain the same for 30 years 10/1 Year Adjustable Rate Plan to live in property more than 10 years, like initial payment stability, can accept later changes OR Plan to move within 10 years and want loan to remain in force in case plans change Interest rate & monthly payment remain the same for 10 years   Starting the 11th year, interest rate adjusted every year, so payment is subject to change every year for remainder of loan 7/23 (2-Step) or '30 due in 7' Plan to live in property more than 10 years, can tolerate one payment adjustment OR Plan to move within 7 years, want to remain in force in case plans change Interest rate & monthly payment remain the same for 7 years Conversion option: On the 8th year, interest rate adjusted to reflect prevailing interest rates, resulting payment will remain the same for remainder of loan   7/1 Year Adjustable Rate Plan to live in property more than 7 years, like initial payment stability, can accept later changes OR Plan to move within 7 years, want loan to remain in force in case plans change Interest rate & monthly payment remain the same for 7 years Starting the 8th year, interest rate adjusted every year, so payment is subject to change every year for remainder of the loan 7 Year Balloon Mortgage Plan to live in property more than 7 years, are willing to refinance at prevailing market rates OR Plan to move within 7 years , like payment stability Interest rate & monthly payment remain the same for 7 years   At the end of 7 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates 5/25 (2-Step) or '30 due in 5' Plan to live in property more than 5 years, can tolerate one payment adjustment OR Plan to move within 5 years, want loan to remain in force in case of plans change Interest rate & monthly payment remain the same for 5 years   Conversion option: On the 6th year, interest rate adjusted to reflect prevailing interest rates, resulting payment will remain the same for remainder of loan 5/5 & 5/1 Year Adjustable Rate Plan to live in property more than 5 years, like initial payment stability, can accept later changes OR Plan to move within 5 years, want loan to remain in force in case plans change Interest rate & monthly payment remain the same for 5 years   Starting the 6th year, interest rate adjusted every 5 years (for 5/5 ARM) and every year (for 5/1 ARM)   5 Year Balloon Mortgage Plan to live in property more than 5 years, are willing to refinance at prevailing market rates OR Plan to move within 5 years, like payment stability Interest rate & monthly payment remain the same for 5 years   At the end of 5 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates 3/3 & 3/1 Year Adjustable Rate Plan to live in property more than 3 years, like initial payment stability, can accept later changes OR Plan to move within 3 years , want loan to remain in force in case plans change Interest rate & monthly payment remain the same for 3 years   Starting 4th year, interest rate adjusted every 3 years (for 3/3 ARM) and every year (for 3/1 ARM)   1 Year Adjustable Rate Want to take advantage of lowest rate possible, are willing to accept yearly payment changes OR Cannot qualify at higher rate programs Interest rate adjusted every year, so monthly payment is subject to change every year for entire 30 year loan term