Getting Good Mortgage Rates

Mortgage rates are the terms in which you agree to pay back the loan you took out to pay for your new home. There are a few to choose from depending on your financial situation, how long you want to live in the home, and the status of the housing market. While you may be able to refinance later, the mortgage rate you choose initially could affect your financial situation for many years. You should consider all of your options before going to a lender. Depending on the amount of money you need to borrow, the amount you are willing to give as a down payment, and your credit history, you may not have as many mortgage rates to choose from or you may have all of them available.

There are four basic types of mortgage rates available through most lenders:

• Fixed rate mortgages

• Adjustable rate mortgages

• Jumbo loans

• Balloon mortgages

These mortgages each have different monthly payment plans and come with their own set of pros and cons. When you are applying for your mortgage, you should weigh carefully your financial situation and choose the best loan possible.

Fixed Rate Mortgages are considered the most traditional of all of these loans. These are loans whose interest rates will not change over the life of the loan. You can choose from 10, 15, 20, or 30 year loan terms. Most lenders expect you to put down at least 5% of the total cost of the home at the closing.

Adjustable Rate Mortgages are available to those who want a lower interest rate that will increase over the life of the loan. Many ARM’s have a three or five year lifespan, after which, it will turn into a fixed rate loan, but there are some that do not. These loans are capped, meaning that they will only go so high and then stay at the highest rate until you pay off the loan. If you want to buy a larger home now and you are in a career that will give you a steady increase in salary over the next few years, then you should consider this type of loan. You can always refinance later on.

Jumbo Loans are mortgage loans that exceed a certain amount and are used by those who are buying homes that can cost half a million dollars or more. These loans are available to those who have good credit and who have the income to pay the monthly payments.

Balloon Mortgages are for those who will only be living in their home for five to seven years. If you want a lower interest rate, this loan may be for you. You will only have up to seven years to pay the loan back, however. If after this time, you want to continue living in the home and you still owe money on the loan, you will have to take out another mortgage from the same lender or a different one to cover what you owe on the first one.

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