Are there just two kinds of mortgages, fixed
and adjustable rate?
You could say that, because all mortgages fall into one of these
two categories -- that is, the interest rate you pay is either the same
(fixed) for the life of the mortgage, or it can change (adjust) over the
life of the mortgage. With fixed-rate
mortgages, your monthly payments for interest and principal never change.
Property taxes and homeowners insurance may increase, but generally
your monthly payments will be very stable.
Fixed-rate mortgages are available for 30 years, 20 years, 15 years
and even 10 years. There are also
"bi-weekly" mortgages, which shorten the loan by calling for
half the monthly payment every two weeks. (Since
there are 52 weeks in a year, you make 26 payments, or 13
"months" worth, every year.)
Adjustable-Rate Mortgages (ARMS) generally begin with an interest
rate that is 2-3 percent below a comparable fixed rate mortgage, and could
allow you to buy a more expensive home. However,
the interest rate changes at specified intervals (for example, every year)
depending on changing market conditions. If interest rates go up, your
monthly mortgage payment will go up, too. However,
if rates go down, your mortgage payment will drop also.
There are also mortgages that combine aspects of fixed and
adjustable rate mortgages. These can start at a low fixed-rate for seven
to ten years, for example, and then adjust to market conditions.
Landmark Mortgage can give you information
about these and other special kinds of mortgages that may fit your
specific financial situation. We
will take the time to assist you in finding the perfect type of mortgage
for your situation. We would love the opportunity to advise you on the best
approach
in obtaining a home loan to purchase or refinance your home.
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