There are many different types of mortgage loans and it is important to understand what options are available to you to make sure you benefit as much as possible from it. The right mortgage loan can save you thousands of dollars. By carefully considering each mortgage option and how it fits within your budget as well as your goals, you will make the right decision and save a lot of time and money in the long run.
With so many options available it is always recommended to reach out to one of our mortgage team, with ample experience, they will be able to work with you to help secure the loan that best suits your needs and financial situation.
Here are some of the elements that should be considered when you are choosing a mortgage loan:
Upfront Costs
The upfront costs of buying a home go further than just the down payment, they also include closing costs, moving costs, home inspection, and others according to the property you are purchasing and the area. Once you have a good understanding of how much money you have for your upfront costs, you can define how much you would like to use for a down payment. Keep in mind that the larger the down payment, the less you will be paying monthly, or you could also shorten the length of your loan in order to pay it off more quickly.
Monthly Costs
Your monthly costs should not only include your mortgage payment, but also your property taxes, utilities, insurance and home maintenance costs. You will want to make sure this number is not more than 30% of your household’s total gross income.
Amortization Period
If you are looking to be mortgage free as soon as possible, you will want to choose a mortgage with the shortest amortization period. The usual mortgage loan has an amortization period of 30 years, but it is also possible to find mortgage loans of 10 or 15 years. You will also want to consider how much interest you are paying in your loan, if your interest rate is very low, it might be beneficial to carry the loan for longer, on the other hand, if your interest rate is high, you might want to pay it off quickly.
Fixed or Variable Rate
A fixed rate mortgage loan has the same interest rate for the entire period of the loan, while a variable rate mortgage loan has an interest rate that changes alongside the market. If you prefer to know exactly how much you will be paying for your mortgage, the fixed rate will be the best option for you. However, if you don’t mind some uncertainty you might choose the variable rate, which might offer lower interest rates.
How Often You Will Make Payments
Most homebuyers pay for their mortgage on a monthly basis, but you might have the option to pay for your mortgage on a bi-weekly basis as well. More frequent payments mean that you will pay less interest over the life of the mortgage even when you have the same interest rate.
Special Programs and Grants
There are many special programs and grants available to homebuyers. These can range from cash assistance for a down payment to programs with very low interest rates. Some of the most popular programs and grants are related to: which state you are purchasing in, if you are purchasing in a rural or suburban area, if you have a military connection, if you are a first-time homebuyer, and others.
Now you know some of the points you should consider when choosing the best mortgage loan for you! Our Mortgage Experts are always available to assist you with any questions, do not hesitate to reach out!
