Buying a New Home?

When you first saw it you knew you had to have it, but how can you afford it? We are talking about that house of your dreams of course and you can afford it! Getting a new home mortgage will allow you to pay off that house over a long period of time, usually 15 or 30 years depending on the length of the mortgage you agree upon. If the new house you want to buy costs $200,000 dollars and you get a 30 year mortgage, you will pay the $200,000 off monthly over the course of 30 years. You will also have to pay interest on the the loan. This process is called amortization.

Home Lending Shouldn't Be Complicated

Mortgages can sound like big, scary, complicated things but in reality they do not have to be. The very basics of mortgage reside with interest rate. Do you want a fixed rate mortgage (FRM) or an adjustable rate mortgage (ARM):

• ARM- An adjustable rate mortgage is a mortgage with an interest rate that fluctuates over the life of the mortgage. With an ARM you will be assigned an interest rate when you agree on your mortgage. This rate will be lower then an FRM at first so for the first few months of the payment you will be saving money. After the first few months the interest rate will go up or down based on a market index. Although you will pay a lower rate at first in the long run it is a gamble because interest rates could go up or down.
• FRM- A fixed rate mortgage is just the opposite, one interest rate for the entire life of the mortgage. You will pay more at the start then you would with a lower ARM, but you have the comfort of knowing your rate will never go up. You are basically paying for that assurance.

When taking out a mortgage the more of a down payment you make the less of the mortgage you will have to pay, therefore you will be paying less per month. While most mortgages are amortized, you can also get an interest-only mortgage. In this type of mortgage you only pay off the interest for the first few years of the mortgage. This means your monthly payments will be much lower at the start but soon will increase once the principal is added into the mortgage. This is a good way to save money initially, than in the future you will have more money to pay off the higher monthly payment. It's always a good idea to do the research and figure out what is best for you. Take advantage of our website and get your free quote today.