Archive for August 2016

It’s Time To Figure Out Which Kind Of Mortgage Is Right For You!

Mortgages are a good option for those who desire to acquire property or equipment fast. Unfortunately, you cannot compare a mortgage to a one-size-fits-all garment. There are different types of mortgages one can choose from to fit different situations. What does this mean? For example, when you go shopping for a vehicle, a salesman can give you all the advantages that come from owning a pickup truck and when you look at it there is actually some sense in owning one. However, what he did not consider was that you could be a salesman working in the city or a soccer mom who needs to drive her kids to and fro school every day.

Yes, the truck sounds like a good idea but will not fit these two scenarios. This is the same with mortgages. The following are mortgages type that you can choose from depending on what suits your situation best.

15 year FRM

A 15-year fixed rate mortgage means that you have to pay off your mortgage in fifteen years. This mortgage type allows you to pay off your mortgage within a short period of time and that come with several benefits. It means that you will not have to put up with payments in your golden years when you are on a fixed income.

The other benefit is that you save a lot of interest to be paid compared to a 30-year plan. The shorter the loan term the less the interest rate! One downside to this mortgage type is that you have to make higher monthly payments than when you have to pay for a longer period of time. This mortgage plan is best suited for someone who is able to make huge monthly payments without too much financial strain.

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5/1 ARM

This is a mortgage type fully known as the 5-year adjustable rate mortgage. There are myths about this mortgage type which can easily scare one away. The 5-year adjustable rate mortgage usually means that you agree on a low interest rate let’s say about 2.75 percent for the first five years. After the first five years are over, the rate changes every year depending on a defined index. This means that your monthly payments will also change depending on how rates change. You save a lot of interest the first five years. This plan suits best someone who is planning to sell off their house after the 5 years are over therefore saving on interest paid.

30 year FRM

The 30-year fixed rate mortgage is popular to many mortgage applicants the reason being the security if offers to borrowers. The mortgage payments are spread out in 30 years on a fixed interest rate meaning that payments stay constant for 30 years. The monthly payments are usually low compared to the 15-year FRM and the first five years of 5/1 ARM. You can use the amount saved on monthly payments to invest in other things therefore, giving you more chances of growing. This plan is best suited for someone who loves security and is looking for low mortgage rates.