If you are hunting for a mortgage, you will notice that there. Many different types of mortgages available I’ll mention some of the most commonly used and their uses.
15 vs 30 years
Your mortgage can be about anything you choose. 15 and 30 year term are very popular these days, although 10 and 20 years are available.
The shorter term, the higher the interest rate. But the main attraction of short-term mortgage is the money you save.
For example, on a $ 200,000 mortgage with a fixed rate of 4.5%, would you say $ 1013.38. Month for 30 years and pay $ 1529.99 per month for 15 years Over 30 years you would pay $ 364,816.80 compared to $ 275,398.20 over 15 years, a savings of $ 89,418.60, or 24.5% interest.
If you are a very conservative district cut a percentage reduction in the exposure of lenders to 15 years, your savings will be nearly 26%.
Adjustable rate mortgages (ARM)
ARM mortgages are adjusting their interest rates, in accordance with the contract you made with the lender.
Normally set interest for the first 1, 3, 5, 7 or 10 years. After this period is up, the interest can fluctuate within the limits of your contract with the lender.
The terms are usually 15 or 30 years (even if you negotiate almost any desired length). This may be a balloon to be involved.
Since the lender will not take a risk of losing money if interest rates rise, these loans have an initial rate of a fixed rate mortgage. The lowest rates are for 1 year ARM and will accordingly.
Many people take an arm, even in times of low prices, as now, as they are now more cheap and able to afford more house. However, the borrower is a risk that even afford the house after the prices are to rise freely.
There was a common time limit variations contracts 2% per year. However, 5% swings are the norm. Depending on what happens, interest rates, you may find themselves priced out of the house. Of course, if you can negotiate interest rates begin to return. Continue reading “Mortgage Terms Explained”