WHAT TYPES OF LOANS ARE AVAILABLE AND WHAT ARE THE ADVANTAGES OF EACH?

If you are looking for stability in your monthly payments, then a fixed-rate mortgage is for you because the monthly payments and interest rates stay exactly the same throughout the entire process.

Types

15-year
30-year

Advantages

The stability that is offered with these types of loans is the main selling feature because you can plan your monthly budget around these rates. Nothing will change for the entire term, so you will not be subject to interest rate changes and you do not have to worry about your monthly payments gradually sneaking upwards.

If are a little more adventurous and believe that interest rates will stay low for the foreseeable future, then an adjustable rate mortgage may be the right one for you. When you choose this type of loan, your payments can increase or decrease, depending on what the interest rates are like at that time.

Types


The balloon mortgage has a very low interest rate and is specially designed for people who want to pay off their entire house early. After the original term has been completed, these balloon mortgage holders have the option of paying off the remainder of their loans or renegotiating another loan.

The Two-Step Mortgage is usually chosen by homebuyers in times when interest rates are soaring because they allow for one adjustment over the entire term. That way, you can still have stability without having to settle for a very high interest rate.

Advantages

The advantages of these types of loans are that they can save you a great deal of money over the course of your loan. If you get lucky and get low interest rates, then you will save a lot. Also, if you are able to pay off the entire amount after the original period, you will save a great deal of money. This option may also allow you to take out a bigger loan, which can be a huge advantage in the housing market.

WHEN DO ARMS MAKE SENSE?
These loans are perfect for people who want to own their home outright very quickly. If you do not want to mess around with a long term mortgage, then get an adjustable rate mortgage and you will have more options when paying your home off.

WHAT ARE THE ADVANTAGES OF 15- AND 30-YEAR LOAN TERMS?

30-Year:

The 30-year mortgage allows you some major tax benefits over the course of your repayment and allow gives you very low rate at the end of the agreement, in comparison to the rest of the market. By the end of your term, people will not believe how low your monthly payments are.

15-year:

With 15-year mortgages, you will have everything paid off much sooner, which is a huge advantage in the long run. You also build up equity much faster, which protects your investment and you can even receive a lower interest rate.