Mortgages

Home Purchase and Refinance Products

When you've made the decision to buy or refinance a home, finding the best loan for your financial situation may seem like a difficult task — there are hundreds of options to choose from. But Ameriprise Home Lending Solutions can make it easy. We're here to help you understand the many mortgage options available, and to find the one that best meets your needs.

Our service guarantee

We're confident in our ability to deliver superior service. That's why we offer industry-leading service guarantees on pricing, same-day loan decisions, and on-time closings.

• Best price — We'll beat any lender's price or pay you $500.¹
• Same day loan decision — Receive a same-day loan decision or we'll pay you $250.
• Closing date — We'll guarantee to meet your closing date or we'll reduce your interest rate by 1/8 of one percent for the life of your loan.²

Types of Loans

Fixed rate mortgages

With a fixed rate mortgage, payments for the interest rate and the principal remain fixed over the life of the loan. As a result, monthly loan payments stay the same over the life of the loan. Taxes, however, may change according to your local or state tax laws.

Advantages	Disadvantages
Interest rate stays the same – it doesn't go up even if market rates increase. Monthly payments of principal and interest do not change. May be a good choice for homebuyers who plan to own their home for a long time.	May cost more than other loan types—the interest rate is often higher than rates for adjustable rate mortgages. A long-term loan may not be suitable for homebuyers planning to move or refinance within 5 to 7 years.

Fixed rate mortgages traditionally have 15-year or 30-year amortization terms. With Ameriprise Home Lending Solutions, in addition to 15- and 30-year terms, other year options are available.

Shorter term	Longer term
May be good for homebuyers planning to own a home for a shorter time Loan is paid off more quickly Generates less interest over the life of the loan, so it costs less overall Translates into higher monthly payments	May be good for homebuyers planning to own a home for a longer time. Loan is paid off over a longer period of time Generates more interest over the life of the loan, so it costs more overall Translates into lower monthly payments

Adjustable rate mortgages (ARMs)

With an adjustable rate mortgage (ARM), the interest rate is fixed for a certain number of years. Afterwards, the rate goes up or down periodically based on an economic index, which lenders use as a benchmark for interest rate adjustments.

The initial fixed rate or teaser rate of an ARM is usually lower than the rate of a fixed rate mortgage. After the initial period, the rate adjusts based on the rate index used by the lender. With every rate adjustment, the mortgage payment will change.

The amount of time between rate adjustments is called the adjustment period. Many ARMs have a one-year adjustment period, meaning that the interest rate will adjust every year. Because rate adjustments can be unpredictable, most ARM programs offer a rate cap that limits the amount the interest rate can increase each year or over the term of the loan. The term for most ARMs is 30 years.

Advantages

Disadvantages

The teaser rate keeps initial monthly payments low, which may enable homebuyers to consider a more expensive home than might be possible with a fixed-rate mortgage. If interest rates go down, the homebuyer will have lower payments. May be a good choice for homebuyers who relocate often or who plan to move after a few years (e.g. homebuyers in the military or those buying their first home). May be suitable for homebuyers planning to refinance within 5 to 7 years. May be appropriate for homebuyers who like the initial payment stability but can afford later adjustments in interest.

After the initial fixed rate period, the rate becomes adjustable and monthly payments could increase if interest rates go up. May not be the optimal choice for homebuyers on a fixed income who may only be able to afford monthly payments during the low teaser rate period. May not be the best choice for homebuyers who plan to stay in their home for longer than the teaser rate period.

Types of Adjustable Rate Mortgages

An adjustable rate mortgage is often written as a pair of numbers—for instance, ―3/1 ARM, ―5/1 ARM, or ―3/3 ARM. The first number indicates the number of years the interest rate will remain fixed. The second number indicates the adjustment period of the loan—how often (in years) the interest rate will adjust after the initial fixed-rate period.

Example: For a 3/1 ARM loan, the interest rate is fixed for the first three years. Starting in the fourth year, the rate adjusts every year. Payments are subject to change every year for the remainder of the loan.

Adjustable rate mortgage disclosures

Consumer Handbook on Adjustable Rate Mortgages

Interest-only ARMs

With an interest-only ARM, monthly payments for the initial period of the loan are made only on the interest. During this time, the interest rate is fixed.

Once the interest-only period is over, monthly payments are made on both the interest and the principal for the remaining term of the loan, and the interest rate is adjusted every year. Interest-only ARMs are available with three-, five-, seven-, and 10-year interest-only terms.

Example: For a three-year interest-only ARM loan, monthly payments are only made on the interest for the first 3 years of the loan. Starting in the fourth year, payments are made on both interest and principal for the remaining life of the loan.

Learn more about interest-only mortgage payments and payment option ARMs

Jumbo Loans

A loan for an amount of money larger than the conforming loan limit set by the government-backed agencies Fannie Mae and Freddie Mac is called a jumbo loan. The agencies buy groups of mortgages and re-sell them as investments. The conforming loan limit is the maximum loan amount that these agencies will buy.

Jumbo loans typically come with higher interest rates that reflect the higher level of risk involved.