Friday, August 10, 2018

Mortgage Options And Alternatives: The More, You Know!

Since, for most of us, our house, represents our single - largest, individual, financial asset, and most people, use some sort of financing, usually mortgages, to be capable of buying a home, doesn't it make sense, for people, to understand, recognize, and know, the different possibilities, when it comes to mortgages, and some of the options, and alternatives? The more one knows about this, the better, he will become, to make the smartest decision, for his personal situation. With that in mind, this article will attempt to consider, review, and evaluate, some of the options, and the advantages and disadvantages, of each of these.

1. Fixed Mortgage: Using a fixed mortgage, provides one, with the ability, to prepare, each monthly, because he knows, fairly well, what his monthly mortgage expense, might be! In addition, sometimes, these have points, which represent, a pre - payment (1 point = 1% of the mortgage principal), and, these are sometimes, necessary, to pay - down, the loan, in order to qualify, while, at other times, these are used, to lower the monthly interest rate. In addition, loans come in a variety of terms, and lengths, and, usually, the shorter the term, the lower the rate. However, shorter terms translate, also, to higher monthly payments. Terms are most often, either 15, 20, 25, 30, or 40 years, and each individual should recognize the difference, in terms of his monthly expenses. Many take longer - terms, so they can pre - pay, and pay - down, when affordable, while maintaining a lower requirement minimum!

2. Adjustable/ variable: An adjustable or variable loan, generally has a lower up - front interest rate, for a specific term, and changes, at specific points, in time. These may also have points, or none! Consider the specific index being used, to determine future rates, as well as any potential cap, both, each period, as well as an overall cap. Also consider, how often the rate might be adjusted.

3. Which one's for you?: Know your personal financial needs, and abilities, and act wisely! Consider several factors, including your personal comfort zone, existing rates (low, or high), probability of rates rising or falling, and what you might be able to afford!

The more one knows, about mortgages, the better the possibilities of making the best decisions! Will you learn, so you might protect, your best interests?

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