1. Mortgage term. Mortgages are generally available at 15-, 20-, or 30-year
terms. The longer the term, the lower the monthly payment if the same
amount is borrowed. However, you pay more interest overall if you borrow
for a longer term.
2. Fixed or adjustable interest rates. A fixed rate allows you to lock in a low
rate for as long as you hold the mortgage and is usually a good choice if
interest rates are low. An adjustable-rate mortgage (ARM) is designed so
that interest rates will rise as interest rates increase; however they usually
offer a lower rate in the first years of the mortgage. ARMs also usually
have a limit as to how much the interest rate can be increased and how
frequently they can be raised. ARMs are a good choice when interest rates
are high or when you expect your income to grow significantly in the
coming years.
3. Balloon mortgages. Balloon mortgages offer very low interest rates for
a short period of time—often three to seven years. Payments usually cover
only the interest, so the principal owed is not reduced. However, this type
of loan may be a good choice if you think you will sell your home in a few
years.
4. Government-backed loans. Government-backed loans, sponsored by
agencies such as the Federal Housing Administration (www.fha.gov) or
the U.S. Department of Veterans Affairs (www.va.gov), offer special terms,
including lower downpayments or reduced interest rates—to qualified
buyers.
Slight variations in interest rates, loan amounts, and terms can
significantly affect your monthly payment. For help in determining how
much your monthly payment will be for various loan amounts.
client's needs, and I work
to realize their dreams as
if they were my own.
Mag Francois
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