Jul 22, 2007

Not a risk taker? Then you’ll probably be most comfortable with a fixed rate mortgage. The interest rate is set throughout the duration of the loan. If you plan to stay in your home for a long time, a fixed-rate mortgage should be desired because it provides home security. Also, if you have a high fixed rate and the fixed-rate loans drop, you may refinance and lock in a lower rate. There are some charges for refinancing, but you will save money in the long run. Fixed rates come in various terms. The term is the length of time you make payments, for example 30 years or 15 years. Choose which is best for you. Keep in mind that with a 15- year mortgage, your monthly payment is more (about 20 to 30 percent), but you pay off the interest and principal faster and you end up paying less. However, with a 30-year mortgage, you can always pay more than your house payment and have that extra money goes toward your principal. By paying down the principal, you can save money as well, but will not be locked into always having to pay extra. Be sure to ask your lender if this can be done without penalty. (that works on any term loan)

Coming up:

-Adjustable-rate Mortgages

-Interest-only Mortgages

-Reversible Mortgages


1 comment:

  1. Now I must say this is some really good stuff here. Thanks for the information.