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Your First Mortgage
Loan
By: Jenny Lane
Every person who has ever bought a home with a
mortgage knows that by the time the pay off is made on the mortgage
more is paid to cover interest costs than the actual purchase price of
the house.
For example, on your first mortgage loan, you
borrow $125,000 at 8% with a 30-year term. After your first mortgage
loan period is done, you’ll have paid over $205,000 in interest and
the $125,000 principal amount you borrowed. A result, your house that
is only for $125,000 ends up costing you $330,000 on your first
mortgage loan.
This is the reason why, it makes absolute sense
that before taking on your first mortgage loan, a little bit of
shopping is done. Getting the best product for your first mortgage
loan is an absolute must-do and most probably the biggest financial
decision you’ll ever have to make.
All right. So let’s get down to the basics. Most
people think that a mortgage is a loan. Well, it’s not. A loan is
something the lender gives you. A mortgage, on the other hand, is
something you give to the lender as collateral, in case you are unable
to complete the payment.
Now when you take on your first mortgage loan,
it’s imperative that you know what types of mortgage products are
currently being offered in the market. Below are some of these first
mortgage loans you may consider.
Fixed Rate For Your First Mortgage Loan
If you’re thinking of getting your first mortgage
loan, a fixed rate mortgage might be the right choice for you. In a
fixed rate mortgage, interest rates are set all throughout the whole
loan term. This means that when you take on your first mortgage loan,
your interest rate will not increase or decrease. The interest rate of
your first mortgage loan will remain the same all throughout the loan
period, usually 30, 20, 15, or even 10 years.
Getting a fixed rate first mortgage loan will have
you paying for a predetermined monthly payment rate. Payments for your
first mortgage loan interest and principal will never change. Having
this type of mortgage for your first mortgage loan is especially
advantageous if over time, interest rates suddenly go up. Plus, down
payment if you get this as your first mortgage loan could be as low as
5% of the original purchasing price.
Adjustable Rate First Mortgage Loan
If the projected interest rates in the market are
going down, then an adjustable rate mortgage might just be the right
option for getting your first mortgage loan. Adjustable rate mortgages
are mortgages where the interest rates and monthly payments depend on
the rise and fall of rates in the market. This type of loan is
especially a good choice for a first mortgage loan also if you expect
a rise in your income over the next few years.
Balloon First Mortgage Loan
If you do not plan on keeping your house for long,
then getting a balloon first mortgage loan will do the trick for you.
A balloon first mortgage loan offers lower interest rates compared to
a conventional loan. The only downside to this type of mortgage for a
first mortgage loan is that a large amount is due in five to seven
years. If you do not have funds to cover that amount and you are still
in the house by the end of the loan term, you might need to get
another loan in order to cover the cost for that first mortgage loan.
There are, of course, several more mortgage loan
types available in the financial industry. There are mortgage loans
that cater specifically to homebuyers. There are those that are made
for people who live in mobile homes. Still, there are car mortgage
loans, bad credit mortgage loans, etc. The list goes on. While you are
not expected to know everything twist and turn of first mortgage
loans, you are however expected to know how the basic loan types work
at least.
About the author: Jenny Lane is a banking
specialist who writes on related financing and banking industry
topics. Find out more about the latest in banking industry at
http://bankingtrends.com
Article Source: www.isnare.com |
