What kinds of mortgages are available?
Fixed-Rate Mortgage – interest rates and monthly payments remain unchanged for the life of the loan Adjustable-Rate Mortgage – interest rates and monthly payments can go up or down, depending on the market Hybrid Loans – a combination of fixed and adjustable mortgages How do you decide which loan is best? These questions may help. How much cash do you have for a down payment? What can you afford in monthly payments? How might your financial situation change in the near future and beyond? How long do you intend to keep this house? How comfortable would you be with the possibility of your monthly payments increasing? What is a Fixed Rate Mortgage? This is the most common loan arrangement in the U.S. With a fixed-rate mortgage the loan’s principal and interest are amortized, or spread out evenly, over the life of the loan, giving you a predictable monthly payment. The upside is, if rates are low, you can lock in for as long as 30 years and protect yourself against rising rates. However, i
At what rates of interest? • Will I have to pay a non-refundable application fee? • How many “points” can I pay? If so, what is the starting interest rate compared to adjustable rate mortgages? • What additional charges can I expect from the lender when I sign the final agreement for my mortgage? • What further costs (legal fees, etc.) can I expect? With Adjustable Rate Mortgages: • What do you use to determine how often and by how much the interest rate will increase or decrease? • Is there a limit on the amount of increase or decrease during a specified period of time? • Are there ways that I can keep interest payments level in the early years of my mortgage? • What are the potential penalties in the later years if I take advantage of these benefits? Lock In Your Rate! • Get a rate lock in writing. A rate lock guarantees your interest rate and terms for a given period. Lock in all the costs you can, the interest rate, and points. Set the lock ”on application” rather than ”on appro
