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Choosing the Right Mortgage

July 13th, 2015 7:16 AM by Jackie A. Graves

A mortgage is a serious long-term financial commitment and a legally binding contract so it's important to choose the right mortgage for your situation. The type of mortgage you select may make a big difference in your monthly payments and the overall cost of your loan.

There are two types of mortgages – fixed-rate and adjustable-rate – that have their own set of features and benefits that need to be carefully considered.




Interest Rate

·         Fixed for the entire life of the loan

·         Won't decrease with interest rate declines

·         Interest rate will change throughout the life of the loan

·         Typically includes upfront fixed interest rate period

·         Adjusts once per year

·         Typically features adjustment cap which limits how much rate can increase/decrease


·         Fixed principal and interest

·         Changes in taxes and insurance may affect payments

·         Principal and interest payment will change throughout the life of the loan

·         Changes in taxes and insurance may affect payment


·         15-, 20- and 30-years

·         3-, 5-, and 7-years


·         Typically no pre-payment

·         May include early pre-payment penalty

More than 90% of all home buyers today that are financing their homes are doing so with a fixed-rate mortgage, locking in historically low interest rates. But for those who plan on living in their home for less than five to seven years or whose budget can withstand payment fluctuations, an adjustable-rate mortgage may make more sense. Talking with reputable lenders and counselors can help you decide which is best for you. Our calculator can help you see the impact on your monthly payments.


Courtesy of Freddie Mac - To view the original article click here

Posted by Jackie A. Graves on July 13th, 2015 7:16 AM


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