Mortgage Options & Alternatives: The More You Know!

For most people, their house, represents their single - biggest, financial asset, so wouldn't it make sense, for them, to proceed, with their eyes - wide - open, and act, in the best possible manner? In addition, the vast number of individuals, take advantage of some sort of loan, and/ or mortgage, and, therefore, often, consider, their monthly costs, rather than, merely the price of the house. Therefore, this article will attempt to briefly examine, consider, review, and discuss, some of the prevailing options and alternatives, regarding the best option, for an individual.

1. Fixed mortgage: Some loans come with, so - called, points, yet, it, seems, very few, understand, what this means. One point equals 1% of the mortgage, paid, up - front, so, for example, a $300,000 mortgage, with one point, means paying $3,000, in advance. This is sometimes, related to credit, while at other times, based on the specific type of loans, and/ or paying - down the rate. The length, or term of the mortgage, generally includes: 15 years; 20 years; 25, 30 and 40 years; and while, the longer, the rate, the lower, the monthly costs, but it also represents, more total payments. It's often a balancing act, between what one can afford, and the best way to proceed. The other advantage of a fixed mortgage, is, having an accurate picture, of one's monthly costs!

2. Adjustable/ variable mortgage: These also come with the possibilities of points, as mentioned above! Other considerations should include an understanding on what rates/ index, determine, the changes, in rates, at specific periods, and what those intervals might be! In addition, one should consider, whether there is a cap, on how much the rate can change, at each period, and overall, during the life, of the loan.

3. When one type, versus other: Many factors might determine, which way to proceed. Sometimes, one may only qualify, initially, because of the proportions and ratios, used, for a Variable mortgage, because, often, these have lower initial rates. Whether the rates are relatively high, at the onset, or low, often, is a major contributing factor, in terns of which is best! One should focus on what makes him comfortable, and paying attention, to both, the immediate, as well, as long - term, monthly rates. It's important to also consider, how long, you intend, to live somewhere, as well as what makes you most comfortable. In addition, don't ignore the fact, qualified homeowners, are capable of refinancing, if that makes sense, in the future!

The more one knows and understands, the better, prepared, he might be, for owning and enjoying, his home! Will you become an educated homeowner/ consumer?