So which is better fixed rate or adjustable rate mortgage?Written by Syd Johnson
This is a question that keeps coming up when customers start looking at purchasing or refinancing their home. If you look at average 30 or 15 year mortgage, it seems that better mortgage depends on type of customer. The best mortgage is one that fits in your long term budget, won’t use up too much of your monthly income, and gives you a sense of control over your home so you don’t end up house rich and cash poor. Let’s look at basics.A fixed rate mortgage gives you sense of control because you know what your interest rate will be for next 30 years. The only concern is that market rate might go down at some point in future and you will end up paying more than current interest rate. You can change this by refinancing loan to lower your payments and get a lower interest rate. An adjustable rate mortgage allows you to play with market rate knowing that sometimes you will be more than market interest rate, and other times you will be paying slightly less. Overall, if economy stays healthy you should feel like you made best decision and did not overpay for your home.
| | You don’t need 10% or 20% down to get a home mortgageWritten by Syd Johnson
The rapid increase in home prices over past couple of years have left many potential home buyers struggling to come up with their 10% or 20% down payment. If you live in a hot market like Los Angeles, Manhattan or Miami, you might be able to afford monthly payments on a home mortgage but have a hard time coming up with one time cash for a down payment. If you can’t come up with a 10% down payment, home mortgage lenders are becoming savvy to your plight and have created many different solutions to help you get financing for your new home. One of top ways to get home mortgage financing is with a 5% down payment. This gives most customers a huge break on amount of cash that they need to purchase a home. In past, 5% down home mortgages were only available as through government funded loans like Veterans Administration Loans. Now, many lenders including banks, credit unions and mortgage companies will work with their customers to offer low down payment deals. In addition, you can also do a zero down mortgage. In this case, entire loan amount will be financed so your monthly payments will be higher than it would have been with a down payment. Also, your home mortgage lender might charge you a slightly higher interest for taking on risk of approving a client without a down payment.
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