What You Need to Know Before Obtaining a Mortgage |
The largest financial obligation and investment a person could make in their lifetime is obtaining a mortgage in order to purchase a home. A mortgage is paid over a period of time and the home you want to purchase is used as collateral.
Mortgages generally are adjustable and have a fixed interest rate. Before choosing mortgage options, make sure you research the implications of each so you can pick one that is best for your situation.
With a fixed rate, expect to pay a constant rate each month until the end of the loan period. Be aware though, fixed rates are set higher because the loan will take many years to pay off, unlike adjustable loans.
Adjustable mortgages reflect the current rates, which may have more risk, especially if rates increase. Some lenders may offer mortgages that combine fixed rate and adjustable loan options.
On average, it takes fifteen to thirty years to pay off a mortgage. You can choose to pay the mortgage off faster, but it does result in paying a higher monthly payment. The advantage to this is you're paying less interest and you are able to own your home faster.
The results of the mortgage terms need to result in what you can afford each month. You should not only choose a low monthly payment, but also need to focus on something more important. The important thing you need to do, as a homeowner, is to put equity in your home.
When you are looking for a mortgage, you may come across a program called "discount points." Usually you obtain points when you pay your mortgage payments on time. Each point usually equals one percent of the principal, which results in lower interest rates.
Before you commit to a mortgage, make sure it is designed within your means and that you can easily make your payments each month. If you plan to keep the home you are buying for a long period of time, you may want to consider purchasing discount points so you can lower your interest rates.
Steven Murphy has been writing articles about mortgages for the past three years. He also enjoys writing about Midtown apartments and West Village apartments. Article Source: http://EzineArticles.com/?expert=Steven_Murphy |
No comments:
Post a Comment