Choosing a fixed rate mortgage, arm and or a construction loan.
Rick Gomez
It is quite normal for potential home buyers to look into 30 year or 15 year fixed mortgage rates when considering their monthly repayments. Many of us are buying homes later in life these days so it is not unreasonable to have the house paid off early. It may take some time to reach a decision as there are many things to contemplate. Home buyers looking into this need to be assured their monthly payments will not increase.
Steer clear of lenders that are offering unbelievable deals because they probably are. A fixed rate mortgage maintains a set interest rate during the period of the loan. For those individuals that don't like hidden surprises, this is always a benefit. Both my wife and I decided to research fixed rate mortgages when we started looking at homes for sale.
Even though it was important for us to pay off our loan at the earliest possible opportunity, we didn't want high, unrealistic monthly payments which we would have trouble maintaining. It became obvious that we had to look at fixed rate mortgages over a longer period and not just 15 year plans. The 15 year fixed mortgage rate was the plan we really wanted because neither of us wanted to be still paying a mortgage when we close to retiring. There was a lot of pressure to have the house paid off as soon as possible.
We thought about it long and hard and despite the pressure we decided to go with the 30 year loan plan. There were many things that factored into this decision. The main reason was that I found out my wife was pregnant. As she intended to raise our child at home we couldn't rely on her financial income to the monthly expenditure. Our monthly payment would have been too high if we had committed ourselves to the 15 year fixed mortgage plan. We just simply didn't want to get in over our heads with a higher monthly payment. A thirty year loan brought the monthly payments down to a reasonable level.
We are also able to make extra payments throughout the year to make the principal shrink quicker. By doing this you can also reduce the term of the mortgage by quite a few years. It may be easier said than done, but this approach does pay off eventually. Our desire for a 15 year fixed rate mortgage was second place to our more immediate needs. All things considered, it all worked out for the best in the end. Construction loans offer the same options when searching for a loan. The construction loans options include fixed and arm construction to perm loans.
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