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Selecting a Mortgage
The type of mortgage you choose can greatly affect the amount of your monthly payment as well as the overall cost of your mortgage. The most common types of mortgages are listed here so that you can compare the benefits of each to determine which is best for you as a first-time homebuyer.
Rates: Interest rates are based on the amount the Federal Reserve charges banks to borrow money from it. Interest rates may vary from lender to lender and from different types of mortgages. Interest rates are also constantly changing. If you were quoted a rate 2 months ago, you may have to pay a higher right today because the market rate has changed.
Fixed vs. Adjustable –
Fixed rate mortgages will keep the same interest rate through out the entire term of the loan. This will make your monthly payment very consistent and predictable.
Adjustable rate mortgages normally are at a lower interest rate for the first few years and then are adjusted to the current market rate. This can cause a dramatic fluxuation in your payment.
Length of Mortgage: Mortgages are typically for 15, 20 or 30 years. The longer the term of the mortgage will lower your monthly payments however it can greatly increase the amount of interest you will pay over the entire term. Ask your lender to show how the different terms will breakdown so you can see which will be the best decision for you as a first-time homebuyer.
Points: Points are percentages of the mortgage paid to the lender for processing the
loan. They can range from 0.5 – 2% and can help you reduce the interest rate of
the mortgage.
Rates: Interest rates are based on the amount the Federal Reserve charges banks to borrow money from it. Interest rates may vary from lender to lender and from different types of mortgages. Interest rates are also constantly changing. If you were quoted a rate 2 months ago, you may have to pay a higher right today because the market rate has changed.
Fixed vs. Adjustable –
Fixed rate mortgages will keep the same interest rate through out the entire term of the loan. This will make your monthly payment very consistent and predictable.
Adjustable rate mortgages normally are at a lower interest rate for the first few years and then are adjusted to the current market rate. This can cause a dramatic fluxuation in your payment.
Length of Mortgage: Mortgages are typically for 15, 20 or 30 years. The longer the term of the mortgage will lower your monthly payments however it can greatly increase the amount of interest you will pay over the entire term. Ask your lender to show how the different terms will breakdown so you can see which will be the best decision for you as a first-time homebuyer.
Points: Points are percentages of the mortgage paid to the lender for processing the
loan. They can range from 0.5 – 2% and can help you reduce the interest rate of
the mortgage.
If you need any more information on this topic or buying or selling a home, contact us. We are here to help.
Pamela Edwards, realtor email me (972)715-0152 Ebby Halliday Realtors, Inc
Pamela Edwards, realtor email me (972)715-0152 Ebby Halliday Realtors, Inc