Which Mortgage Is Best For You

The choices are numerous and quite varied. You should study this list, examine your needs and constraints and then consult with your accountant and lawyer. Then, when you think you have decided which loan type is best for you, you will be able to proceed with the proper level of knowledge and confidence.

A.) FIXED RATE MORTGAGE (30, 10, 15, 10-years) ~ Your interest rate and monthly payment remain the same for the entire term of the loan, you plan to live in property more than 10 years and you like total payment stability.

B.) 10/1 YEAR ADJUSTABLE RATE MORTGAGE ~ Your interest rate and monthly payments will remain the same for 10 years, and starting in the 11th year, the interest rate will be adjusted every year, so the payments are subject to change every year for remainder of loan. This is a good option if you are planning to live in a property for more than 10 years, like initial payment stability and can accept later changes. This is also a good deal if you plan to move within 10 years and want a loan to remain in force in case your plans change.

C.) 7/23 (2-Step) OR '30 DUE IN 7' MORTGAGE ~ Your interest rate and monthly payments will remain the same for 7 years. There is also a conversion option: On the 8th year, your interest rate is adjusted to reflect the prevailing interest rates, which results in your payment remaining the same for the remaining term of your loan. This will all suit you if you plan to live in your property more than 10 years and can tolerate a one time payment adjustment. This is also good for people who plan to move within 7 years but want the loan to remain in force in case plans change.

D.) 7/1 YEAR ADJUSTABLE RATE MORTGAGE ~ Your interest rate and monthly payment will remain the same for 7 years and starting in the 8th year, the interest rate will be adjusted every year. Subsequently your payment is subject to change every year, for the remainder of the loan. This type of arrangement appeals to people who are planning to live in their new property more than 7 years and like initial payment stability and have no problem with changes later on or plans to move within 7 years time and they want the loan to remain in force in case their future plans do change.

E.) 7 YEAR BALLOON MORTGAGE ~ Your Interest rate and monthly payments remain the same for 7 years but at the end of the 7 year term your loan is due in full. You must then be prepared to refinance into a new loan at the prevailing interest rates. This is a good option if you plan on living in this property for more than 7 years and you are willing to refinance at the future prevailing market rates or you plan to move within 7 years and you prefer consistent payments.

F.) 5/25 (2-Step) OR '30 DUE IN 5' MORTGAGE ~ Your interest rate and monthly payment remain the same for 5 years and there is a conversion option. On the 6th year the interest rate will be adjusted to reflect the prevailing interest rates and the resulting payment will then remain the same for the remainder of theloan. People opting for this arrangement either plan on living in their property for more than 5 years and can absorb one payment adjustment or plan to move within 5 years and want the loan to remain in force in case of future changes to their plans.

G.) 5/5 and 5/1 YEAR ADJUSTABLE RATE MORTGAGES ~ Your Interest rate and monthly payments remain the same for 5 years but commencing on the 6th your interest rate will be adjusted every 5 years if it is for a 5/5 ARM, and every year if it is for a 5/1 ARM. A good scheme if you plan to live in the property for more than 5 years, like initial payment stability and can accept future changes, or you are planning on moving within 5 years and you want the loan to remain in force in case things change.

H.) 5 YEAR, BALLOON MORTGAGE ~ The interest rate and monthly payment will remain the same for 5 years and at the end of the 5 years the loan is due in full. You must then be prepared to refinance into a new loan at whatever the prevailing interest rates are at that time. If you plan to live in this property for more than 5 years and you are willing to refinance at the prevailing market rates or plan to move within 5 years and like payment stability, you should consider these options.

I.) 3/3 and 3/1 YEAR ADJUSTABLE RATE MORTGAGES ~ The Interest rate and monthly payment remain the same for 3 years but starting in the 4th year the interest rate will be adjusted every 3 years for the 3/3 ARM, and every year for the 3/1 ARM. Do you plan to live in this property for more than 3 years, like initial payment stability and can you can accept future changes, or do plan to move within 3 years and need a loan that remains in force in case plans change, then this may be a consideration.

J.) 1 YEAR ADJUSTABLE RATE MORTGAGES ~ The interest rate will be adjusted every year and the monthly payment is subject to change every year for the entire 30 year loan term. This is OK if you want to take advantage of the lowest rate possible and you are willing to accept yearly payment changes. This is also a good option if you cannot qualify for higher rate programs.

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