Finding out about mortgages, and what options you have when it comes to these, is necessary when you are contemplating buying a house in the near, or even distant, future. Should you get yourself a mortgage for your home purchase? Is there more than just one type? If so, which one will best suit your home buying needs?
It is a good idea to ask an expert about these things, preferably someone who has extensive knowledge about the pros and cons of the different kinds of mortgages you can consider. You cannot really get all the information you need about such loans in one sitting, however, to get you started, here are some of the more commonly used mortgages and loans people use and the good as well as bad of each one.
Fixed rate mortgage - this is one of the more straightforward mortgages you can get, with a fixed interest rate, as the name implies, that stays the same over the entire period of the loan. The downside of such a loan is that, if interest rates fall in the area of your home, you will be stuck with a higher interest rate for the entire duration of your mortgage.
Variable rate mortgage - this is a home loan that adjusts with the times, which means, when interest rates go down, so do your loan interest rates. If these go up however, your interest rates go up as well.
Balloon mortgage - the term "balloon" comes from the fact that you have to make a large payment, or a balloon sum, at one point in your loan repayment scheme. This kind of a loan usually comes with small payments over a fixed period of time, which enables you to save up for the lump sum at the end of the loan term. This can be risky if you do not have the balloon amount when it is needed.
Interest only mortgage – similar to a balloon mortgage, interest only mortgages allow borrowers to pay only small amounts on the onset (in this case, only the interest). This type of a loan is ideal for those who expect an increase in income over time, but this is also risky since you could get used to low payments and find yourself unable to adjust to the higher ones afterwards.
These are just some of the mortgage options you have when you are considering buying a home. To help you decide which one is best for you, consulting with real estate experts, like the people at guamvaloans.com may be a good idea. Not only will you get advice on which home loan is ideal for your situation, but you will also get advice on searching for homes that best suit your needs and budget.
