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HTML <html> <head> <title>Home Mortgage Financing</title> </head> <body> <h1>Home Mortgage Financing</h1> <div class="info">Author: <a href="author_1_104755.html">Liz Lunn</a></div><div class="body">When it comes to home mortgage financing, there are plenty of options. When you talk to your mortgage lender about the possible financing options, get detailed explanations about how each financing program works and get those explanations in writing.<br /><br />1. Conventional fixed rate 30 year mortgage: This is likely the mortgage your parents had. Today it is still one of the most popular mortgage financing options. You borrow the amount needed to purchase the home of your dreams and then you repay it with interest over a 30 year period. The interest is fixed at the rate you agree to at the time the mortgage is given. It does not change from year to year or go up after a certain number of years. Your monthly payment remains the same over the life of the loan, with the exception of your final payment which may be lower than the regular monthly payment. In the beginning, your payments are mostly applied towards the interest and that is usually tax deductible. Over time, you owe less in interest because the principle has gone down and you begin to lose your tax deduction.<br /><br />2. Conventional fixed 15 year mortgage: This loan works the same way as the 30 year fixed rate mortgage, only you repay the entire loan over 15 years. This can be a significant savings because the bank will usually give you a 1/4 or 1/2 point deduction in your interest rate. While it may not sound like the difference between 5.5% and 5.75% is a lot, consider this:<br /><br />A $200,000 mortgage for 30 years at 5.75% has a monthly payment of $1167.15. You will pay $220,172 in interest over the life of the loan.<br /><br />A $200,000 mortgage for 15 years at 5.5% has a monthly payment of $1634.17. You will pay $94,150 in interest over the life of the loan.<br /><br />Now do you see why a 15 year mortgage can save you so much money? If you cannot afford the 15 year mortgage payments, then make sure to negotiate that there be no pre-payment penalty in your mortgage agreement. Then, pay extra on your mortgage any time that you can so that you will lower the overall cost of the loan over time.<br /><br />3. Adjustable rate mortgages (ARM): This mortgage is for a set term, such as 15 or 30 years, and it always looks attractive because it has a very low interest rate. The catch is that the interest rate adjusts with the economy. If interests rates go up in general, then so does your mortgage rate. Often the interest rate adjusts every 1 year or every 5 years. Right now interest rates are low, so chances are they are going to go up over time. Therefore, this mortgage may not be a good choice if you plan to stay in your home for awhile.<br /><br />4. Interest only mortgages: Simply put, these are never a good idea, no matter how attractive the loan appears to be. With this mortgage financing option you make payments only on the interest of the loan. While this means a $500,000 mortgage can have payments as low as $500 a month, you will still owe the $500,000 at the end of the loan. This amount has to be refinanced into a more traditional mortgage. You will not have increased the equity in your home and if you cannot afford the new mortgage payment, or even qualify for a traditional mortgage, you will be forced to sell the house or risk foreclosure. You will be what is referred to as a desperate seller. Home buyers will love you because you will likely have to sell the house at a loss and the new owner will have gotten a great deal on the home.</div> <div class="source">Article Source: <a href="http://www.articlealley.com/article_234022_19.html">http://www.articlealley.com/article_234022_19.html</a></div> <div class="author"> <div class="authorBio"></div> </author> </body> </html>
Text Home Mortgage Financing Author: Liz Lunn When it comes to home mortgage financing, there are plenty of options. When you talk to your mortgage lender about the possible financing options, get detailed explanations about how each financing program works and get those explanations in writing. 1. Conventional fixed rate 30 year mortgage: This is likely the mortgage your parents had. Today it is still one of the most popular mortgage financing options. You borrow the amount needed to purchase the home of your dreams and then you repay it with interest over a 30 year period. The interest is fixed at the rate you agree to at the time the mortgage is given. It does not change from year to year or go up after a certain number of years. Your monthly payment remains the same over the life of the loan, with the exception of your final payment which may be lower than the regular monthly payment. In the beginning, your payments are mostly applied towards the interest and that is usually tax deductible. Over time, you owe less in interest because the principle has gone down and you begin to lose your tax deduction. 2. Conventional fixed 15 year mortgage: This loan works the same way as the 30 year fixed rate mortgage, only you repay the entire loan over 15 years. This can be a significant savings because the bank will usually give you a 1/4 or 1/2 point deduction in your interest rate. While it may not sound like the difference between 5.5% and 5.75% is a lot, consider this: A $200,000 mortgage for 30 years at 5.75% has a monthly payment of $1167.15. You will pay $220,172 in interest over the life of the loan. A $200,000 mortgage for 15 years at 5.5% has a monthly payment of $1634.17. You will pay $94,150 in interest over the life of the loan. Now do you see why a 15 year mortgage can save you so much money? If you cannot afford the 15 year mortgage payments, then make sure to negotiate that there be no pre-payment penalty in your mortgage agreement. Then, pay extra on your mortgage any time that you can so that you will lower the overall cost of the loan over time. 3. Adjustable rate mortgages (ARM): This mortgage is for a set term, such as 15 or 30 years, and it always looks attractive because it has a very low interest rate. The catch is that the interest rate adjusts with the economy. If interests rates go up in general, then so does your mortgage rate. Often the interest rate adjusts every 1 year or every 5 years. Right now interest rates are low, so chances are they are going to go up over time. Therefore, this mortgage may not be a good choice if you plan to stay in your home for awhile. 4. Interest only mortgages: Simply put, these are never a good idea, no matter how attractive the loan appears to be. With this mortgage financing option you make payments only on the interest of the loan. While this means a $500,000 mortgage can have payments as low as $500 a month, you will still owe the $500,000 at the end of the loan. This amount has to be refinanced into a more traditional mortgage. You will not have increased the equity in your home and if you cannot afford the new mortgage payment, or even qualify for a traditional mortgage, you will be forced to sell the house or risk foreclosure. You will be what is referred to as a desperate seller. Home buyers will love you because you will likely have to sell the house at a loss and the new owner will have gotten a great deal on the home. Article Source: http://www.articlealley.com/article_234022_19.html About the Author:
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