If you’re in the market for a new home, that means you’ll also be looking at getting a mortgage. However, not all mortgage loans are created equal, and while some are a good fit for the vast majority of homebuyers out there, there is no such thing as a one-size-fits-all mortgage. You need to know how to choose the right one.
This is the most common type of mortgage, and it’s generally the best fit for more buyers. A fixed rate mortgage is exactly what it sounds like. Your payments and interest rate will remain the same throughout the life of the loan. They tend to last 20-30 years or so, but there are 15-year fixed mortgages, too.
Adjustable rate mortgages are a bit different. The interest rate is pegged to the general interest rate. Often, they start off very low for the first year or so, and then the interest starts to change. If the national interest rate goes up, so does your payment. If it drops, so does your payment. It’s something of a gamble, but it can pay off for certain buyers.
This type of mortgage is exactly what it sounds like. It starts out very low, and then skyrockets with the entire balance coming due shortly. This is the best option for buyers who will be coming into money in the very near future and who want to pay off the home in a short time.
Each of these mortgages has its own unique subtypes as well. The best option is to speak with an experienced lender who can explain the various options in greater detail and help you understand how each one will fit with your lifestyle and your future plans.