With the array of mortgages available to homebuyers, sometimes the flurry of definitions can make understanding the products a challenge. Here are simple explanations that will help you determine what type of mortgage is right for you.
The fixed rate mortgage is one of the more traditional ways to finance a home. This mortgage offers a fixed interest rate for the life of the loan, usually 15 years or 30 years, this and the bad credit payday loans are two of the most popular loan options. When you choose this mortgage, your interest rate and monthly payments stay the same for the life of the loan. This loan works
With a 15-year mortgage, you will own your home sooner and pay about half the interest that you would on a 30-year fixed rate. The trade-offs are higher monthly payments and less deductibility on your income taxes. If there are some issues with a mortgage company, you can always address Chicago Consumer Law Center for legal advice and filling a law suit to protect your rights.
Most buyers choose the 30-year fixed rate mortgage, which is more manageable The fixed rate is appropriate for homebuyers who like predictability and feel they are getting the best rate when they close on their home.
Adjustable-rate mortgages, or ARMS, mean just that-the interest rate and your monthly payment rise or fall as interest rates change. The initial interest rate is now lower than a fixed rate, however that rate can change periodically depending on a market index. Then, after the initial time period of one, three, five or seven years, the rates are subject to change.
With this type of mortgage, as a buyer you should weight the advantages of risk later on in relationship to your financial future and a general understanding of economic conditions.
While there are many more financing options available, the fixed rate and the ARM are most familiar to buyers. As you begin to examine mortgage possibilities, it is my responsibility to help you choose the option that is best for you and your long-term financial health.
Learn more from Shawn Tihen at iBeria Bank