Mortgages - Which Loan is Right For You

When buying a home, you need to take a home mortgage loan, either because as a debtor, you end up paying less tax, or because in a market where property prices rise faster than salary levels, the money you have saved falls short of the amount required. When searching for a home mortgage loan, you can select from a wide variety. Study the types of mortgage loans available in the market and note the interest rates for each before you sign any documents. You can select from the following:

Fixed rate mortgage loans charge you the same rate of interest over a period of 15 to 30 years. You pay a high rate of interest over the tenure of the loan, because neither you nor the lender can take advantage of interest rate fluctuations, but you pay the same sum each month. This is an excellent option if you are on a fixed income or a salary. You begin by paying off the interest first and the principal later-as most of the loan is paid off, your equity in the house increases as compared to the lenders. When selecting a fixed rate mortgage, check the interest rates offered for fixed rate mortgages, select the loan tenure based on your repayment capacity, and ensure that you are not penalized for prepaying your loan.

Adjustable or variable rate mortgage loans (ARMs) are mortgage loans for the same period of time as fixed rate mortgages, where the interest rate changes based on market trends either annually, or every three, five, seven, or ten years. Although ARMs are considered risky due to the floating interest rate, the amount you pay as interest on the mortgage loan is lower as compared to that paid for a fixed rate mortgage loan. If you select an ARM when interest rates are high, you will pay off your loan with a slightly lower interest rate. Ensure that a periodic rate cap and a loan lifetime rate cap is included as part of the loan agreement-these will ensure that your rate does not rise or fall more than two percentage points in a period and does not rise or fall more than six percentage points during the mortgage loan tenure.

Balloon mortgage loans have three to ten year tenures, during which you pay the same amount each month. At the end of the loan tenure, you pay off the balance of the mortgage loan as one lump sum. Balloon mortgage loans are available at fixed or adjustable rates, but are considered highly risky because you end up paying off the interest on the mortgage loan and not the principal, and you stand to lose both the property and the money paid to date to the owner if you cannot pay off the loan balance at the end of the tenure or get refinance. If you want to save money by paying a lower rate of interest, are buying properties when interest rates are high, are sure of purchasing the property you want, are confident of refinance options when the balloon is due, or have no other choice, select a balloon mortgage loan.

This information should help you select the right mortgage loan. Check interest rates carefully before buying and you should be all right!

Joseph Kenny is the webmaster of the loan information sites Select Loans and also UK Personal Loan Store.

---

Borrow on a Budget: Getting the Cheapest Home Improvement Loans

Getting the cheapest home improvement loans isn't always easy. It... Read More

Mortgage After Bankruptcy

Most people probably assume that obtaining a mortgage to purchase... Read More

Flexible Mortgage Guide

Here is a useful flexible mortgage guide. Flexible mortgages are... Read More

How To Save Hundreds A Month On Your Mortgage

When it comes to American spending habits, the sad truth... Read More

How easy is it to get a Commercial Mortgage in the UK?

As is the case when applying for any mortgage, be... Read More

Thought You Can Go All Alone In Mortgages! Mortgage Advice Beneficial In All Important Decisions

Mortgages are easy as long as you understand them well.... Read More

Guide to Mortgage Terms

Listed below is a guide to mortgage terms. It is... Read More

Understanding Fixed-rate Mortgages

A fixed-rate mortgage is a mortgage on which the interest... Read More

Refinancing Your Home - Is the Time Right?

Refinancing your home is a major decision not to be... Read More

Reverse Mortgage Maximization

Have your home's appreciation grow twice as fast.For Seniors over... Read More

Home Equity Loan ? Good Choice for Luxury Purchases?

Home equity loans or lines of credit have increased dramatically... Read More

What Exactly is a Mortgage Broker and How Can He/She Help You Save Thousands on Your Mortgage?

Have you ever heard of a mortgage broker before? If... Read More

Mortgage Terms Explained

When you are hunting for a mortgage, you will find... Read More

Seniors Can Use a Reverse Mortgage to Fund Annuities, Investments, and Insurance Policies

For many seniors in or entering retirement, the prospect of... Read More

Keep Your Eye Focused on Treasury Bond Rates To Adjust Your Current Mortgage Rates

Mortgage rates typically are based off the current rates of... Read More

Home Equity Loans Categories

Fixed Rate Mortgages: These loans have a fixed rate of... Read More

Reasons To Get A Home Equity Loan

Using a home equity loan really depends on what your... Read More

Should You Refinance Your Mortgage if Interest Rates Drop?

Mortgage refinancing is when you take a mortgage of a... Read More

Poor Credit? Get a Sub-Prime Mortgage Now, and Refinance to a Conventional Mortgage Later

There are great mortgage loans for people with poor credit,... Read More

Home Equity ? Let the Market Eliminate Your Private Mortgage Insurance

In decades past, most people who were interested in obtaining... Read More

Secured Homeowner Loans to Reiterate that a Home Provides More than a Roof Over Your Head

"The ache for home lives in all of us, the... Read More

Jumbo Home Mortgage Loans - What They Are and Where To Get Jumbo Loan Financing

A jumbo mortgage is different than a conforming loan. A... Read More

Self Employed Mortgage Loan ? Getting a Mortgage When You?re Self Employed

Being self employed has many benefits. When you are self-employed,... Read More

PayDay Loan Online - Quick Cash Advance Loans Online Are Very Convenient

Getting a quick cash loan, cash advance or payday loan... Read More

Consolidate Your Debt With a Home Equity Loan and Improve Your Credit Score

A home equity loan is a loan based on the... Read More

Online Mortgage Loan Companies Are Convenient

There are many reasons to use the internet to take... Read More

HELOCs and Second Mortgages: Which One Should I Choose?

Whether you need some extra cash to pay off some... Read More

Your Mortgage Rate Compare and Save

When trying to obtain the best mortgage rate compare offers... Read More

A Guide to UK Buy to Let Mortgages

Essentially there is little difference between the process that one... Read More

This Secret Weapon Will Eanble You To Close Up To 200% more Home Remodel Sales

Many Homeowners are not aware of all the options that... Read More

10 Questions To Ask Your Mortgage Rep or Banke

This post is a must read for anyone considering purchasing... Read More

Refinance Your Home Equity Loan

Refinancing your home equity loan is an excellent way to... Read More

What is a Commercial Mortgage?

A commercial mortgage is a loan that uses commercial property... Read More