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Home Mortgage
Houses on sale today require down payments that are more than a renter
can afford. So how do you own a home when you do not have enough savings
to cover down payment costs? The answer is a home mortgage.
A Home Mortgage is not the same as a Home Loan
A home mortgage
is the contract that you sign in order to get a loan from a banking
institution or lending company.
The loan is the money that the lender
provides for you.
There are many kinds of home mortgages available in the market. These
home mortgages differ in their loan terms or their rate status. The
advantage of each type of home mortgage depends upon the financial
situation of the times. Some home mortgages fare better when interest
rates are low. Others rise up to the challenge of high home mortgage
rates.
Fixed Rate Home Mortgage
Fixed rate home mortgages are home mortgages whose interest rates
remain set for the duration of the loan term. The monthly payments
for a fixed rate home mortgage may either for a period of 15 years
or 30 years.
Fixed rate home mortgages are considered stable. With fixed rate home
mortgages, your interest rates are guaranteed and your monthly payments
are predetermined.
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"If you have money, men think you are wise, handsome, and able to sing like a bird.”
- Jewish proverb
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A 30-year fixed rate home mortgage has its own advantages and disadvantages.
Usually fixed rate home mortgages with 30-year loan terms give the
consumers the opportunity to borrow money on a long-term basis. The
amortization period for this type of fixed rate home mortgage is longer
and the monthly payments are lower. One drawback, however of this
home mortgage is its high interest bill and slow equity build-up.
15-year fixed rate home mortgages attract borrowers because of its
relatively shorter amortization period. Equity in this home mortgage
is quickly built up and interest bills are significantly lower. One
disadvantage though is that 15-year fixed rate home mortgages have
higher monthly payments and higher interest rates.
Adjustable Rate Home Mortgage
Contrary to a fixed rate home mortgage, an adjustable rate home mortgage
is a home mortgage where the rates are adjusted regularly, usually
after the first year is over. Adjustable rate home mortgages generally
have lower interest rates compared to fixed rate home mortgages. But
this low interest rate in adjustable rate home mortgages is only for
a short period of time. After about a year, the new interest rate
of an adjustable rate home mortgage will either rise or fall, depending
on the movement of the lending company’s prime rate.
Knowing whether or not an adjustable rate home mortgage is right for
you depends on your income status and the type of adjustable rate
home mortgage payment you plan to make. In the long run, adjustable
rate home mortgages might prove risky for the home buyer.
Since adjustable rate home mortgages rely on the interest rates of
the market to adjust their own interest rates, monthly home mortgage
payments for adjustables are uncertain. When interest rates in the
market are low, you are sure to gain savings with an adjustable rate
home mortgage. However, when rates are high, your adjustable rate
home mortgage might cost you more than you’re willing to give.
Additional Resources and Latest News:
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Palm Springs area business briefs for Sunday, Feb. 5The Desert SunCOACHELLA VALLEY — Wells Fargo & Co. will host a free home mortgage workshop for about 16000 home mortgage customers from Riverside and San Bernardino counties and surrounding areas from 9 am to 7 pm Feb. 14-15 at the Ontario Convention Center, ...and more » |
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