Finding a Mortgage That Works For You

One of the hardest things you’ll face when purchasing a home is finding the perfect mortgage. This is no simple task as the right mortgage depends on numerous factors, including your current financial situation, future financial situation, and the amount of time you intend to stay in your home. Here’s a primer on the two most popular mortgage loans amongst American homeowners.

The fixed rate mortgage, which is the most popular mortgage option in the US, is a loan in which a borrower’s monthly payment remains unchanged as does the associated interest rate for the life of the loan. Many borrowers prefer this type of mortgage as it allows them to reliably and consistently plan ahead. Fixed rate mortgages are also not subject to rising interest rates or to any changes that occur within the market.

Another common mortgage type is the adjustable rate mortgage. These loans can start out at an interest rate as low as 3% less than a comparable fixed rate and therefore very often enable borrowers to afford a more expensive home. However, keep in mind that the interest rates associated are dependent on changing market conditions and are therefore highly subject to change. For example, when interest rates increase, your mortgage payment will increase, and when rates decrease, your mortgage payment in turn decreases. For many borrowers, this is a very cost effective option that allows them to handle their mortgage payments while simultaneously save money as going with this option could save you thousands of dollars in interest over the life of your loan.

If still unsure of what the right mortgage is for your financial situation, be sure to speak with a mortgage professional.