Home Mortgage Loans - Fixed Rate, Adjustable Or Balloon, Which One Is Right For You?Written by Carrie Reeder
When you're shopping for a new home—especially for first time—all terms and expressions may be confusing and difficult to understand. Adjustable rate, fixed rate, balloon payment - how do you decide which is right type of home mortgage for you if you're not even sure what each of them are? The name of mortgage type usually has to do with how you'll pay for your loan - how interest on loan is being determined by bank. The three major types of mortgages are fixed rate, adjustable rate and balloon payment. Each has advantages and disadvantages. Fixed Rate Mortgage With a fixed rate mortgage, you have a set interest rate for entire life of loan. The interest rate that you pay for your loan won't change - which means that you'll pay same monthly payment for entire length of loan. This protects you from unexpected rises in interest rates that would increase your monthly payment. At same time, should interest rates drop, you will have option of refinancing at a lower interest rate. Because protections are largely on side of buyer with a fixed rate mortgage, interest rates on them are generally slightly higher than they would be on other types of mortgages. A fixed rate mortgage is safest type. Because payments are predictable, it’s usually considered most desirable type of mortgage. Always choose a fixed rate mortgage if interest rates are rising. Adjustable Rate Mortgage When you choose an adjustable rate mortgage, your monthly payment and interest rate will fluctuate with current market interest rate. If interest rate goes up, so will your monthly payment. If it drops, your monthly loan payment will as well. The adjustable rate is tied to an index, which is determined by lender. Other terms of mortgage are also determined by lender. These include how often interest rate is adjusted - anywhere from every 3-6 months to once a year, how much interest rate can increase or decrease on any adjustment date, and whether there is a 'cap' on how high interest rate can rise.
| | Get Out of Debt Written by Medha Roy
It is said that a pet tiger cub can become dangerous if it tastes blood. It will stop at killing no one, not even people who brought it up. Similarly, once we get taste of money and freedom of purchasing through credit, we seem to know no bounds. What do we land up with? Heaps and heaps of debt. Most of us feel rich at beginning of month and end up feeling like worms at end of it. To relieve us of this feeling, credit cards have made their entrance with full gusto. And we have been literally swept off our feet. We can afford to be rich even on last day of month. We can buy whatever we want for kids, for house and for ourselves, credit cards showing us green signal all along. Little do we think of unpaid bills ready to storm us anytime following month. OK. Now, its paytime folks! Have you seen first Harry Potter movie? The scene in which sealed letters for Harry, from Hogwarts, begin to pour into house from all openings and outlets? Unpaid credit card bills begin to pour into our lives just like that. Lightning strikes on a bright sunny day and darkens our lives big-time. There are two clear roads for you to take. One, mortgage everything you have, sell all valuables, take your children out of school, sell your car - in one word, commit suicide. The other way is to think wisely (at least this time) and look for ways to get out of debt. One of first things people think of doing is file bankruptcy. This is again one of biggest mistakes anyone can make. For a debt of $7000, you will end up ruining your credit score forever. And social and psychological pressure of bankruptcy is not a matter of joke. Meanwhile, creditor calls are causing you sleepless nights. What's best way out? Consolidate all your debts. Contact a local but well-known debt consolidation firm and take their advice and help. Debt consolidation programs condense multiple debts into one and reduce your debts. They contact your creditors and make them stop calling you. Then they make you pay one low payment every month and eliminate debts much faster than you would have done on your own. Debt consolidation programs not only eliminate debts but they also draw up a budget for you. If you follow this budget, you can become debt-free in months and never ever incur debts again.
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