The Best Mortgage Option for You
A mortgage on your house or property is a very huge financial commitment. Rushing into a decision on this matter is a very bad idea that can cause you huge losses and lots of headaches. So do your homework and take time to study your options before committing yourself to a lifelong decision.
Depending on your financial situation, you can find a mortgage option that best applies to your case. Mortgages are long term loans that can last at least 10 years up to 40 years. 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. A fixed rate mortgage is a loan that has the same interest for the entire duration of the mortgage. In an adjustable rate mortgage, on the other hand, the interest rates change. To some people, paying the same amount each month is an advantage, but to others the possibility of paying a lower amount has a great appeal.
Majority of people settle for a fixed rate mortgage than for an adjustable rate. If you plan to stay forever in your property, a fixed rate mortgage is more suitable, otherwise, if you have plans on leaving the property, the adjustable rate mortgage is best.
2) The two types according to the presence of government backing are: government insured or conventional. Once you have decided on the interest rate, you need to decide on whether to get a government insured loan or a conventional loan. 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) Conforming or jumbo loan. What then is the ideal type based on the size of your loan: A conforming loan or a jumbo loan? This depends on the amount of money you need, if it is a small amount or a huge one. If you are only borrowing a small amount of money, then a conforming loan is enough, but if you plan to borrow a very huge amount, you need to apply for a jumbo loan.
Study your options and do your research in order for you to arrive at a safe and sound mortgage decision.