Another popular mortgage option is a flexible interest only mortgage. Unlike an adjustable rate mortgage the interest rate remains the same but the payment can change. This option allows for the homeowner to make a minimum payment each month that only covers the interest that as accrued on the home loan. It is up to the homeowner how much more they pay on the mortgage to cover the principal. Individuals that select this option for their mortgage must be incredibly self-disciplined.
The mortgage payment will be due at the same time each month. The interest payment will stay the same and is at a very minimum what needs to be paid on the date each month. With the flexible option it is up to the homeowner how much extra they will pay towards the principle. This is a great mortgage loan for those working in commission based jobs. The amount of money brought into the household changes monthly and therefore the payment can be adjusted to match that. Different amounts can be paid each month with the goal of paying down the principle of the mortgage as quickly as possible.
Another popular option in home loans is a fixed rate mortgage. With this type of mortgage the interest rate on the loan remains the same throughout the loans lifetime. This type of loan option represents more than seventy fiver percent of mortgages. The terms of the loan vary anywhere from ten to thirty year options. The thirty year fixed interest mortgage loan is the most popular. It is important to note that the fifteen year fixed mortgage rate option starts to build equity in the home at a much faster rate than the thirty year option.
One of the greatest advantages found in a fixed rate mortgage is that the homeowner knows exactly how much they are paying each month towards the interest of the loan as well as the principal. It is understood that the payment will remain constant for the length of the loan. This option makes creating a household budget a lot simpler as the interest rate and mortgage payment with interest and principle included will remain constant for the length of the home loan.
Homeowners like predictability and that is what is offered when choosing a fixed rate mortgage. With the rate being agreed upon at the beginning of the loan there is no concern when it comes to changes with market interest rates. If the interest rate on mortgages does decrease in the future homeowners have the ability to refinance to the lower rate. The homeowner will be required to pay the closing fees on the new mortgage. The good thing is that if the rates increase at all, even a significant change, the rate on a fixed rate mortgage does not change. Homeowners pay a premium to lock in the interest rate as the interest rate on an adjustable mortgage is usually slightly lower however it remains unstable throughout the life of the loan. There are tradeoffs associated with both of these mortgage options that homeowners need to consider before locking into one over the other.
Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at http://brightoncrosscountry.com/.
