Choosing the Right Mortgage

You actually make two purchases when you buy a home. One when you buy a home and again when you get a loan to finance that home.

Choosing the right home loan for you: Fixed Rate, Adjustable Rate or somewhere in between. Home loans come in many shapes and sizes. Deciding which loan makes the most sense for your financial situation and goals means understanding the benefits of each.

There are 3 basic types of home loans. Each has different reasons you'd choose them.

Adjustable Rate Mortgage
An adjustable rate mortgage may be the right choice if you...

• Plan to stay in your home less than 5 years.
• Comfortable with the risk of possible payment increases in future.
• Don't mind having your monthly payment periodically change (up or down).
• Think your income will probably increase in the future.

Fixed Rate Mortgage
A fixed rate mortgage may be the right choice if you...

• Plan to live in home morethan 5 years.
• Like the stability of a fixed principal/interest payment.
• Don't want to run the risk of future monthly payment increases.
• Think your income and spending will stay the same.

Combination Rate Mortgage
A combination rate mortgage may be the right choice if you...

• Want the stability of a fixed principal/interest payment in the short term.
• Want to repair your credit by demonstrating your ability to make regular payments, then refinance for a lower interest rate.
• Have a lot of consumer debt (these loans typically allow more).
• Want to borrow more and get a lower monthly payment than a standard fixed rate loan.

Before You Begin

Here are five ways to get the most bang for your money beginning before you step out the door to shop.

• Get pre-approved
  Get pre-approved for your mortgage loan, rather than just pre-qualified. With pre-approval, the lender pulls a credit report, verifies a borrower's income and takes other preliminary underwriting steps to come up with a maximum allowable loan amount, which usually doesn't change. The lender also commits, in writing, to making that loan if a purchase occurs within a set amount of time. In a pre-qualification, the customer provides the information, but the lender doesn't check it and there's no assurance that the loan will be approved.
• Check out ARMs
  Short on cash? Consider an adjustable-rate mortgage. ARMs feature lower monthly payments at first, something that might help marginal buyers get into a home. If the one-year ARM's annual adjustment is too volatile for your tastes, some relatively new adjustables offer initial fixed periods that endure longer. Consider a longer-term ARM, such as a 5/1 or 7/1 that features an initial fixed period of five years or seven years. You'll pay a little more in interest than for their one-year counterparts, but less than for a 30-year fixed-rate loan.
• Float a balloon
  Balloon loans are another option available to get a lower payment in the first few years. These mortgages charge less interest upfront for a set time frame, but require the borrower to either refinance at the end of that period, pay off the loan or convert it to a fixed payment schedule.
• Buy down the rate
  If you've got the cash now and want to lower your payments, you can "buy down" your mortgage rate. It's a simple concept, really: In exchange for more money upfront, lenders are willing to lower the interest rate they charge, cutting the borrower's payments.
• Trim closing costs
  Of course, the mortgage rate isn't the only thing that determines how much financing will set you back. Closing costs add a significant chunk of change to the final bill, so borrowers should try to minimize them, too.

For more information on which home loan is right for you. Please take a few minutes out of your day to apply, there is no obligation to find out which loan would be right for you, its fast and easy, so Apply Today!

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