Hooray for Fixed Rate Home Mortgages
This traditional type of home mortgage can be the best deal for you. Since you know your interest rate before you sign, this type of home mortgage gives you the assurance of a fixed monthly payment. Your amortization schedule, a page that shows you how fast your equity builds up, will clearly tell you how fast you will own your home. But this is only the beginning.
Like everything else today, a fixed rate home mortgage comes with different varies and options.
The first, and most obvious, is the length of the loan. Loans can be anywhere from 10 to 30, or even 40, years in length. The standard home mortgage is usually either 15 or 30 years. When home mortgages began, they were all 30 years, but times have changed. If you, like most of us, are not swimming in cash, a 10 year home mortgage will be hard to come by.
Also, stay far away from the 40 year home mortgage your broker is trying to push. When you look at the fine print, only $25 a month may be going to principle! If this is the only mortgage you can get, look for a cheaper house and fix it up. But that is a different story. The best idea on length is to go for the shortest possible. Why? Because for the first third of a home mortgage, you are paying almost all interest. So even if you squeeze an extra $100 out of your budget, equity will probably still build up faster with a shorter loan.
Here's the simple test:
1. Write down how much you will pay each month toward your home mortgage (don't be optimistic, if anything lowball). Example: $600 a month
2. Write down the total payment, including insurance, taxes and homeowner's association dues, of the home mortgages you are considering. Example: $625 a month
3. Write down how much is going every month towards principal for the first year (your loan officer will be able to tell you this). In this example: $80 a month
4. Subtract line 2 from line 1 (it will likely be negative). Example: $600 - $625 = -$25
5. If Step 4 was positive, recheck line 1. If it is still positive, add it to line 3. If it is negative, leave line 3. Example: $80 a month
6. Cry.
Do this for each home mortgage you are considering. This will give you a good idea of whether or not you actually will pay the loans off early. If none of the loans offer a significant difference, go with the shortest. You will own your house that much sooner.
Finally, your broker will probably talk to you about options for your loans like "points". Don't let the jargon fool you. There are only three numbers you care about: how much you have to bring to closing, how much you have to pay every month and how much of that goes toward your principal. Keep your eye on the ball, and you will be bragging to your friends about your great home mortgage.
Be sure to visit this website.
http://www.homemortgage-tips.info
Like everything else today, a fixed rate home mortgage comes with different varies and options.
The first, and most obvious, is the length of the loan. Loans can be anywhere from 10 to 30, or even 40, years in length. The standard home mortgage is usually either 15 or 30 years. When home mortgages began, they were all 30 years, but times have changed. If you, like most of us, are not swimming in cash, a 10 year home mortgage will be hard to come by.
Also, stay far away from the 40 year home mortgage your broker is trying to push. When you look at the fine print, only $25 a month may be going to principle! If this is the only mortgage you can get, look for a cheaper house and fix it up. But that is a different story. The best idea on length is to go for the shortest possible. Why? Because for the first third of a home mortgage, you are paying almost all interest. So even if you squeeze an extra $100 out of your budget, equity will probably still build up faster with a shorter loan.
Here's the simple test:
1. Write down how much you will pay each month toward your home mortgage (don't be optimistic, if anything lowball). Example: $600 a month
2. Write down the total payment, including insurance, taxes and homeowner's association dues, of the home mortgages you are considering. Example: $625 a month
3. Write down how much is going every month towards principal for the first year (your loan officer will be able to tell you this). In this example: $80 a month
4. Subtract line 2 from line 1 (it will likely be negative). Example: $600 - $625 = -$25
5. If Step 4 was positive, recheck line 1. If it is still positive, add it to line 3. If it is negative, leave line 3. Example: $80 a month
6. Cry.
Do this for each home mortgage you are considering. This will give you a good idea of whether or not you actually will pay the loans off early. If none of the loans offer a significant difference, go with the shortest. You will own your house that much sooner.
Finally, your broker will probably talk to you about options for your loans like "points". Don't let the jargon fool you. There are only three numbers you care about: how much you have to bring to closing, how much you have to pay every month and how much of that goes toward your principal. Keep your eye on the ball, and you will be bragging to your friends about your great home mortgage.
Be sure to visit this website.
http://www.homemortgage-tips.info
posted by mileslancaster at 10:54 PM
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