This is part four in a five part series on what you need to know about mortgages before you buy a home. The housing market is an interesting beast, because it comes and goes, rises and falls, allows some people to flourish and brings others to ruins. If you want to understand how the housing market works, you should begin with an introduction to mortgages.
You may not feel like you are benefiting since you are paying greater interest, but you will be making lower monthly payments thanks to the longer fixed term and you will get a much bigger tax deduction in the grand scheme of things. If you plan on staying inside your home for many years, especially if you believe that your income is not going to be increasing much through the years, then this is probably going to be the best option for your needs. This type of loan also tends to be the easiest for most people to qualify for.
20 year fixed rate mortgage: You can take ten years off of your mortgage and you typically get a lower rate of interest when you are taking out a 20 year loan with your lender. These are not typically offered through as many different lenders and banks, so you may actually have to shop around in order to get what you are looking for. The advantage here with the shorter term is that you are going to have more equity in your home much sooner than if you had a 30 year loan. Your payments, however, are going to be higher since you are paying more off per month to pay the loan off more quickly.
15 year fixed rate mortgage: This loan offers similar benefits to the 20 year mortgage loan, such as a quicker pay off period, higher amount of equity and a lower interest rate, but the monthly payment is going to be even higher, so make sure that you consider the trade off.
Adjustable Rate Mortgage
An adjustable rate mortgage, also known as an ARM has an interest rate that is going to be variable based on the changing rates in the market and current trends in the economy. They typically offer one initial interest rate that is lower than fixed rate mortgages tend to be, but the trade off is that these mortgage interest rates do not offer nearly the same stability as fixed rate mortgages do. If you do not expect that you will be living in a home for a long time, then an adjustable rate mortgage or ARM mortgage may be exactly what you are looking for.
How often your ARM interest rate is going to adjust is actually going to depend on the specific terms of the loan that you take out. You may choose a one year, six month, two year or some other term ARM depending on your lender. There is typically going to be an initial time period where the rate isn't going to change, which can be from six months to as many as several years.
Photo Credits: moon angel
Originally posted 2009-08-24 03:21:12. Republished by Blog Post Promoter
Related Posts -
Introduction to Mortgages pt 1 of 5 The housing market is an interesting beast, because it comes and goes, rises and falls, allows some people to flourish and brings others to ruins. If you want to understand how the housing market works, you should begin with an introduction to home mortgages. This is part one in a...... -
Do You Need an Accountant? The average person usually tries to struggle with their finances year after year and only visits an accountant a few days before their taxes are due. By this point, it’s up to the accountant to try to piece everything together and they won’t be able to offer much help when...... -
Mortgage Home Possessions Continue to Rise The last two quarters of 2008 have seen a steady increase in the number of mortgage possession orders reaching the county courts, and this is according to data and statistics that have been released by the UK's Ministry of Justice. In England and Wales, there have been a total sum...... -
Why Certificates of Deposit Are A Good Idea Today's article is written by guest blogger Jim of Bargaineering. If you've saved up a few dollars and aren't sure if you should put them in the stock market or stick them in your mattress, let me give you another suggestion: put your funds into a certificate of deposit (CD)....... -
The Many Flavors of Loans Money can be lent to those in need, at a reasonable rate, from a pool of money that comes from investors and savers. When the lending institution provides money for consumers to borrow, either secured or unsecured, the practice is known as providing a consumer loan. These loans do not......
Related Websites -
Spin] Home | Improvement | Loans [/Spin] Free Tips MAINE STATE HOUSING AUTHORITY home improvement loan SINGLE FAMILY HOME IMPROVEMENT LOAN PROGRAMS Summary: The Maine State Housing Authority may offer mortgage financing for the improvement of single family housing for persons of low or moderate income, including without limitation, rehabilitation, home replacement, emergency repairs, lead paint mitigation, accessibility improvements,...... - November Prosper Marketplace Survey Released Prosper released the November marketplace survey and coresponding comentary from Chris Larsen... I particularly like the insight in the last paragraph... Of great interest is the anecdotal evidence of prime and near prime borrowers turning to Prosper for loans that would have historically been steered toward mortgage, auto, and home......
-
Save Time, Money and Space in Over 80 Ways If you're looking for handy gadgets, tools and various items that can save you time, money or space (or all three!) this list of more than 80 top products is just what you need. Everyone's got saving money on their minds these days. Some of us are always looking to...... - What's really involved with buying your first home I remember the day I first considered buying instead of renting. I was sitting on the floor of the 1-bedroom apartment my then-husband and I shared, looking at the free newspaper I'd snagged from the laundry room. We'd just received notice that our rent would be going up, and so......
-
Buying a Fixer Upper with an FHA 203k Loan Most people are familiar with using an FHA loan to buy a home. If your home and income qualify, it can be one of the most competitive financing products out there. However, what if you find a beautiful piece of coal that just needs some polishing to become a diamond?......
- Personal, Field Gear Original Period Items Vietnam 1961-75 Militaria Collectibles
- Adjustable Wrenches Wrenches Hand Tools Tools Home Improvement
Categories:
Mortgage, Personal Finance
Tags:
0 comments ↓
There are no comments yet...Kick things off by filling out the form below.
Leave a Comment