Do you know what mortgage type is right for you? Take a look at the different types of real estate mortgages. Each one has their own advantages and disadvantages.
An ARM will have a variable interest rate. Typically, it is lower at the start of the mortgage. It will either fluctuate over the entire life of the mortgage, or be fixed for a period of time, 10 years perhaps, and then fluctuates for the rest of the mortgage.
Advantages
Interest rate drops so does your payment
Save money if you sell before fixed period ends
Disadvantages
If there’s no fixed rate period, payment changes
Potential for payment you can’t afford
Fixed rate mortgages have the same interest rate for the length of the mortgage. This is the most popular mortgage, with about 3/4 of the market.
Advantages
Mortgage length 15, 20, or 30 years
Predictable payments
Disadvantages
Higher interest rate
Pay closing costs again if you refinance
These are made through traditional methods with no government backing. With good credit and a substantial down-payment, this is a good option.
Advantages
Can be fixed rate or adjustable
Better interest rates
Disadvantages
Higher down payment
Closing costs and fees must be paid at settlement
Higher fees
These loans are backed by the government. VA is specifically for active military, eligible veterans, and surviving spouses.
Advantages
Smaller or no down payment
Easier to qualify
Credit score isn’t as important
Disadvantages
Loan amounts limited by location
Possibly higher payments
These are the most common loan types. Which one is right for you? Contact Beaches Title Services today for more information.
