Popular Mortgage Options In 2016 Continued

In our last installment on mortgage options we discussed three popular options including the thirty and fifteen year fixed rate mortgages and adjustable rate mortgages.  Throughout this installment we will look into other popular options homeowners have when looking into financing a home.

Interest only mortgages can be either fixed or adjustable rate and offer homeowners the option to pay only the interest on their mortgage for a specific term between five to ten years.  The loan is set up in a manner in which you can pay the interest only or interest and principle until the end of the interest only period.  The risk of this type of loan option is that if the value of your home does not appreciate as you may expect when you decide to refinance your options could be limited.

If you are unable to refinance at the end of the interest only period you could be stuck with an incredibly high mortgage payment.  Interest only loans offer a flexible payment option that allows you to buy more home than what you may be able to afford when you are initially buying.   This makes a lot of sense for homeowners who know that they will be making more income in the future and therefore will be able to handle the higher payment.

Another option homeowners have when it comes to obtaining a mortgage is the flex pay payment option.  With this type of mortgage the homeowner has the ability to pay a different amount each month.  The monthly payment can include a low payment option, an interest only payment option and an interest plus principle option.  This option is great for those homeowners without a steady income.  It is incredibly flexible month to month.  The major risk with this type of loan is that if you only pay the interest payment option and the home does not appreciate homeowners may find themselves owing more on their home than it is worth.

A balloon mortgage is a fixed short term mortgage that follows an amortization schedule similar to traditional fixed term mortgages.  The terms of a balloon mortgage are three, five or seven years in which you pay interest and mortgage.   At the end of the balloon term you need to come up with a manner in which to pay off the home, most often this comes from refinancing.  The one drawback is if the interest rates at the end of the balloon period are high you will not have an option to wait until rates are better to refinance.  This means that homeowners could be stuck with a higher than average mortgage payment.

It is important to sit down with a mortgage broker to discuss available options.  Homeowners all have different financial situations and different monthly needs.

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/.

Popular Mortgage Options In 2016

When it comes to mortgage options there are more than a few options to choose from.  In this installment we will look at popular mortgage options from fixed to adjustable, thirty to fifteen years and more.

The first option we will discuss is the most traditional type of mortgage available is the thirty year, fixed rate mortgage.  This option offers a mortgage payment where the interest and mortgage payment stays the same for the entire life of the home loan.  At the end of thirty years you will have completely paid off your home.

Thirty year mortgages are good for individuals who prefer the stability of a fixed monthly payment.  It is important to note that these type of mortgage is often more expensive than their adjustable-rate counterpart.  Homeowners are willing to pay the premium because this home loan is pretty straightforward, easy to understand and provides payment stability.  This option is a solid bet for homeowners that are looking to stay in their homes for more than ten years.

Fifteen year mortgages are the exact same as thirty year mortgages but require less time to pay them back.  The benefit of a fifteen year, fixed mortgage is the rate at which you are able to build equity in your home.   If homeowners can afford the higher monthly payment that comes along with a fifteen year mortgage and they like the stability a fixed mortgage offers than this is a solid mortgage option.

Another popular option in mortgages is known as ARM’s, adjustable-rate mortgage.  This mortgage option adjusts the interest rate that homeowners pay at a given time and frequency.  There are a few ways that an ARM can work.  Most often however the mortgage starts out offering a lower interest rate then what is found with a thirty year fixed rate mortgage and steadily adjusts with the market.   When the initial rate period of the mortgage ends and the ARM adjusts you may end up with a higher payment than you originally started out with.

The major risk involved in an ARM is that there is not a guarantee on what your future payments will be.  ARM’s do have many benefits that homeowners should consider when looking into a mortgage.  For instance, ARM has a lower initial rate over a fixed mortgage.  A lower initial payment allows buyers to afford more house than they would have with a fixed rate mortgage.  It is also advantageous to have an ARM if it is believed that the interest rates will lower in the future.

In our next installment we will look into more popular options in mortgages from interest only to balloon mortgages.

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/.