Few of us invest enough time and effort into researching and securing the best deal for a mortgage to get our home.
For the majority of us, our house may be the single most important and expensive purchase we ever make!
We invest plenty of time and effort into finding the right property in the best location and with as many of the features from our wish list as you possibly can Refinance Coconut Creek, yet, in regards to finding the best deal for a mortgage, we take what is offered as opposed to researching and securing the best mortgage for our situation.
Considering that the common homeowner will pay out more in interest over the time of their mortgage compared to home originally cost, you can see why getting yourself the best deal for a mortgage now, could save countless amounts of dollars in interest over the 20 30 year term of your home loan.
Your research to discover the best mortgages or loans and repayment options currently available could be carried out on the web, thus making the whole procedure that much easier and time efficient for you.
Mortgages are not a “One Size Fits All!”
Mortgages can be found in numerous forms and you’ll need to keep yourself informed of the various forms in order to determine which is the better deal for a mortgage to your unique circumstances.
Basically, mortgages belong to among the following categories. Lenders can have variations of the basic categories, but armed with this information, you will be able to sort through your choices for the ideal package.
Fixed Rate Mortgages:
Loan having an interest rate that remains at a specific rate for your term of the mortgage/loan. Approximately 75 per cent of home mortgages are this type. A fixed rate mortgage is often considered the best deal for a mortgage for very first time buyers as you are able to establish a consistent relatively fixed budget of household operating expenses.
ARM’s or Adjustable Rate Mortgages or Variable Rate Mortgages:
A mortgage/loan having an interest rate that adjusts or varies with the changes in rates paid on Treasury Bills or bank Certificates of Deposit. In Canada, the rates vary in line with the posted weekly Bank of Canada rates.
To offset the chance associated having an adjustable rate mortgage, some lenders offer various ‘capping’ options. Often, they fix or limit the maximum level to that your interest rate you are subject to can rise for certain period of time. Sometimes they fix the cap annually and sometimes for the time of the mortgage.
Adjustable or variable rate mortgages can be very attractive as usually the rates are considerably below for fixed rate mortgages. They’re a great vehicle for borrowers who are attentive to the rate fluctuations and prepared to ‘lock in’ their mortgage when interest rates start climbing. If you’re constantly watching the amount of money markets, this can be the best deal for a mortgage for you.
A mortgage in that your monthly payment is not meant to repay the entire loan. The ultimate payment is a large lump amount of the rest of the principal. Balloon mortgages tend to be only partially amortized and requiring a lump sum repayment at maturity.
It’s popular mortgage in the US for homeowners who aren’t planning in which to stay their new home for more than 5 or 7 years. The advantage is that the interest rate is below a fixed rate mortgage however, the disadvantage is that if you remain in the home beyond the 5 to 7 year term, you will have to secure a new loan or mortgage to pay off the balloon mortgage.
Jumbo Mortgages or ‘Non-Conforming’ Mortgages:
In the US, Congress has legislated a conforming limit to the amount a mortgage is allowable for funding by Federal National Mortgage Association (a.k.a: Fannie Mae) and the Federal Home Loan Mortgage Corporation (a.k.a: Freddie Mac). The 2009 limit is $417,000; $625,500 in Alaska, Guam, Hawaii and the U.S. Virgin Islands.
Any loan or mortgage above that conforming limit is considered a Jumbo Mortgage. A Jumbo mortgage/loan enables you to borrow over the conforming limit, but for that privilege, you’ll incur higher interest rates. You can find variations to the Jumbo Mortgage including the Super Jumbo Mortgage, but I’m sure you get the fundamental picture.
Canadians have an equivalent called a “High Ratio Mortgage” guaranteed/funded through Canada Mortgage And Housing Corporation (CMHC).
Since you have identified which kind of mortgage might suit you best, you’ll need to consider repayment methods and you basically have two options:
A pursuit only payment method could be coupled with almost any traditional mortgage. Interest only payment periods hardly ever run for your term of the loan, so prepare to possess your payment rise to incorporate both principal and interest when the interest only period ends.
Principal and Interest or Capital & Interest:
Your monthly repayments are split into a pursuit payment and a principal or capital repayment. In the early years of the mortgage period all of the monthly payment is swallowed up in interest but as time passes the total amount reverses and you start to pay off more of the capital or principal borrowed.
So Many Mortgage Lenders… So Many Choices!
You can find so many mortgage lenders offering such many different loan options that in the beginning it could seem a daunting task trying to determine which lender most suits you and your circumstances and which Lender is offering you the best deal on a mortgage!
It is very important to notice that as you shop for a mortgage, each lender will perform credit check prior to committing to the mortgage or loan. Each credit check remains on your own credit record and may potentially lessen your credit score and eligibility for a mortgage or loan.