Mortgage shopping isn't the most
exciting part of buying a house, but it is necessary. That's
why it's crucial to understand all your options before
taking the plunge.
Fixed Rate: With today's lower interest rates, many people
are choosing the stability of a fixed rate mortgage over
other options. With this type of mortgage, every month your
mortgage payment is the same, which is perfect for those who
find it easier to budget monthly expenses when mortgage
payments are predictable.
Long-term fixed rate: If you can qualify for such a loan,
and plan on staying in your home for many years, this option
may be for you.
Adjustable Rate: This type of loan is popular because it
allows you to obtain a lower interest rate than fixed rate
loans, and you make lower monthly payments. If you plan on
moving within a few years this is probably the mortgage
option for you. Of course, the downside is that the monthly
mortgage payments you make will change from month to month.
If interest rates skyrocket your monthly mortgage payment
may exceed an amount you can afford.
Other options
If you have a good, steady income but have little saved
toward a down payment, obtaining a loan from a home mortgage
funds company, such as Fannie Mae, may be something to
consider. Mortgage companies such as Fannie Mae buy mortgage
loans and then sell their own loans to keep customers buying
into the mortgage market.
Many loans are now available that didn't exist in the past.
Potential homeowners have many options when it comes to
mortgages, and as a result, more and more people are
entering the real estate market. If you have a good income
but little savings, a large amount of savings but little
income, or poor credit, there may be a mortgage out there
for you.
Balloon Mortgages: Offer lower monthly payments,
comparable to a 30-year mortgage, but come due in 5 to 7
years. If you will only be in a home for a short amount of
time, this may be the perfect choice, but stay away if you
plan on settling down.
Hybrids: Somewhere in between a balloon mortgage and
a fixed or adjustable rate mortgage. For 5-7 years you enjoy
the benefits of a fixed rate mortgage, after which time you
either switch to a variable rate mortgage or stay with a
fixed one. With this type of loan you get the best of both
worlds. |
