Learning The “Secrets” of Services

Three Types of Mortgages

If you are planning to mortgage your house or property, this is a probably the most important financial decision you will make in a long time. The consequences of failure in this regard is so life-changing, you need to think it over and over again before finally deciding. So do your homework and take time to study your options before committing yourself to a lifelong decision.

Among the different mortgage options you can avail of, look for one that best suits your financial status. It will take from 20 – 40 years before a mortgage matures. It is therefore important that you are aware of the implications of the mortgage agreement you will be entering into with the bank. If you learn the pros and cons of each type of mortgage, it will help you decide on what type is best for you.

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? This should guide you in determining the type of mortgage that suits you.

1) The two types according to interest rates are: Fixed and adjustable. Would the same interest rate for the entire duration of the mortgage be best for you? Would you rather have changing interest rates per month? The advantage in a fixed rate mortgage, the money you pay out is the same each month; while in the adjustable rate mortgage interest rates can go down, and you pay less for that period.

But fixed rate mortgages are the most popular type of mortgage. 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. There is no government backing in conventional loans, but the advantage of government insured loans is that you get backed up by the government in case of mortgage failure.

3) Conforming or jumbo loan. The next step is to determine whether a conforming loan or a jumbo loan is ideal for your situation. It all depends if you need only a small amount or a very big amount – how much money do you need? For smaller amounts of money, conforming loans would be ideal; but for larger amounts, 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.