07 Dec Choosing the Perfect Mortgage
Determine which mortgage is right for your financial situation.
There are a few mortgage options out there to choose from, each with its own nuances. Understanding the benefits of each and making a decision regarding which is correct for your situation can be a challenging task.
Adjustable Rate Mortgage (ARM)
An adjustable rate mortgage is only a good idea if you plan to be in your home for a shorter time than the fixed period. After the period has ended, your interest rate can be adjusted at any time, potentially skyrocketing your monthly payments and putting your personal finances at risk.
Fixed Rate Mortgage
A fixed rate mortgage is a loan that has an interest rate that remains steady for the life of the loan. This is the best option if you plan to stay in your home longer than a fixed period that you could get on an ARM. The predictability of this loan makes it a great option for planning your personal finances, buckling down, and accruing equity in your home for long-term success.
Reduced Down Payment Options
There are three standard options for low down payment, non-conventional loans. An FHA loan is considered a “first time homebuyer loan”. FHA loans are available to anyone, but allows the homebuyer to put only 3.5% down on the loan. VA loans are available at a 0% down payment rate, but are restricted to veterans. USDA rural housing loans are also available at 0% down payment, but require you to purchase a home that is approved because it is in a specific rural area or town.
Determining which type of loan is perfect for your specific situation can be challenging, but with a little research and the right advice from your realtor you will find one that fits your needs and gives you the financial security level that you’re comfortable with.