When it comes to mortgage options there are more than a few options to choose from. In this installment we will look at popular mortgage options from fixed to adjustable, thirty to fifteen years and more.
The first option we will discuss is the most traditional type of mortgage available is the thirty year, fixed rate mortgage. This option offers a mortgage payment where the interest and mortgage payment stays the same for the entire life of the home loan. At the end of thirty years you will have completely paid off your home.
Thirty year mortgages are good for individuals who prefer the stability of a fixed monthly payment. It is important to note that these type of mortgage is often more expensive than their adjustable-rate counterpart. Homeowners are willing to pay the premium because this home loan is pretty straightforward, easy to understand and provides payment stability. This option is a solid bet for homeowners that are looking to stay in their homes for more than ten years.
Fifteen year mortgages are the exact same as thirty year mortgages but require less time to pay them back. The benefit of a fifteen year, fixed mortgage is the rate at which you are able to build equity in your home. If homeowners can afford the higher monthly payment that comes along with a fifteen year mortgage and they like the stability a fixed mortgage offers than this is a solid mortgage option.
Another popular option in mortgages is known as ARM’s, adjustable-rate mortgage. This mortgage option adjusts the interest rate that homeowners pay at a given time and frequency. There are a few ways that an ARM can work. Most often however the mortgage starts out offering a lower interest rate then what is found with a thirty year fixed rate mortgage and steadily adjusts with the market. When the initial rate period of the mortgage ends and the ARM adjusts you may end up with a higher payment than you originally started out with.
The major risk involved in an ARM is that there is not a guarantee on what your future payments will be. ARM’s do have many benefits that homeowners should consider when looking into a mortgage. For instance, ARM has a lower initial rate over a fixed mortgage. A lower initial payment allows buyers to afford more house than they would have with a fixed rate mortgage. It is also advantageous to have an ARM if it is believed that the interest rates will lower in the future.
In our next installment we will look into more popular options in mortgages from interest only to balloon mortgages.
Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at http://brightoncrosscountry.com/.