Deciding on a Mortgage
One of the largest financial commitments you will probably make in your lifetime is a mortgage. Rushing into a decision on this matter is a very bad idea that can cause you huge losses and lots of headaches. Clue up and do research before entering into an agreement.
There are a number of mortgage options to choose from depending on your status. It will take from 20 – 40 years before a mortgage matures. It is therefore important that you are aware of the implications of the mortgage agreement you will be entering into with the bank. You can get a good idea of what type is best for you if you look into some of the advantages and disadvantages of each type of mortgage agreement.
Here are some helpful information to guide you in your choice.
What do you need the money for, where are you going to use it? The type of mortgage that you will enter into depends largely on your need.
1) Fixed rate or adjustable rate. If you are going to choose a fixed rate mortgage, then you will pay the same interest every month for the entire loan period. Would you rather have changing interest rates per month? The advantage in a fixed rate mortgage, the money you pay out is the same each month; while in the adjustable rate mortgage interest rates can go down, and you pay less for that period.
But fixed rate mortgages are the most popular type of mortgage. Fixed rate mortgage is ideal for people who plan to stay forever in the property; while adjustable rate mortgage is ideal for those who plan on moving.
2) Will a government insured or conventional mortgage be best for you? Next, you need to determine if you want a government insured loan or a conventional one. The advantage of a government insured loan is that you have a guaranteed backing from the government; while in conventional loans there is none.
3) Will a conforming or jumbo loan be best for you? Finally, you need to decide what type of loan will best answer your financial need – a conforming loan or a jumbo loan? It all depends if you need only a small amount or a very big amount – how much money do you need? For smaller amounts of money, conforming loans would be ideal; but for larger amounts, you need to apply for a jumbo loan.
The best way to guarantee your peace of mind in the future is to research your options carefully before mortgaging your home or your property.