Different Types of Mortgage

Fixed:

• A fixed term (for example, 15 or 30 years) as well as a fixed interest rate.
• The interest rate and term are fixed at the start of the mortgage.
• The monthly amount for the payment of principal and interest will not change during the term of the mortgage.

Adjustable:

• Often referred to as an ARM (Adjustable Rate Mortgage).
• The interest rate on your mortgage will be adjusted up or down according to current interest rate levels.
• The monthly amount for your principal and interest payment will go up or down with these rate changes.
• They may be a good choice if you are sure that you will not be owning the home for an extended period (more than 5-7 years) of time.

What type of Mortgage Is better?

Several factors play into deciding what mortgage is best for you:

• Your current financial position;
• How you expect your finances to change;
• How long you plan to live in your home;
• How comfortable you are with your monthly payment changing periodically.

If you're not sure which type of mortgage loan is best, one of our mortgage loan officers can explain the pros and cons of each to help you make an informed decision

What is the down payment? Down payments will vary from 3% to upwards of 25%. As an average, most home buyers make down payments in the 5%-15% range, although your own personal situation may dictate more or less down payment. The minimum amount of cash you want to put down on your house, expressed as a percentage of the property's value. A 10% down payment means that 90% will be financed; a 5% down payment requires 95% financing.  When you are factoring money for a down payment, don't forget about closing costs, which will total in the 2-5% range, payable in cash at the time of closing.

What a mortgage payment include? The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes, homeowner's insurance, and mortgage insurance (if applicable). The best way to learn about mortgages and their payments is to ask a lender that can explain all the numbers relating to your future or current mortgage.  Always be sure of your interest rate if it’s fixed or variable, if your taxes are included in your monthly mortgage payment, and what type of loan you are accepting.  The first time going through the mortgage game can be tough to understand, but once you get through, it all begins to make sense.