Mortgages - Which Loan is Right For You

When buying a home, you need to take a home mortgage loan, either because as a debtor, you end up paying less tax, or because in a market where property prices rise faster than salary levels, the money you have saved falls short of the amount required. When searching for a home mortgage loan, you can select from a wide variety. Study the types of mortgage loans available in the market and note the interest rates for each before you sign any documents. You can select from the following:

Fixed rate mortgage loans charge you the same rate of interest over a period of 15 to 30 years. You pay a high rate of interest over the tenure of the loan, because neither you nor the lender can take advantage of interest rate fluctuations, but you pay the same sum each month. This is an excellent option if you are on a fixed income or a salary. You begin by paying off the interest first and the principal later-as most of the loan is paid off, your equity in the house increases as compared to the lenders. When selecting a fixed rate mortgage, check the interest rates offered for fixed rate mortgages, select the loan tenure based on your repayment capacity, and ensure that you are not penalized for prepaying your loan.

Adjustable or variable rate mortgage loans (ARMs) are mortgage loans for the same period of time as fixed rate mortgages, where the interest rate changes based on market trends either annually, or every three, five, seven, or ten years. Although ARMs are considered risky due to the floating interest rate, the amount you pay as interest on the mortgage loan is lower as compared to that paid for a fixed rate mortgage loan. If you select an ARM when interest rates are high, you will pay off your loan with a slightly lower interest rate. Ensure that a periodic rate cap and a loan lifetime rate cap is included as part of the loan agreement-these will ensure that your rate does not rise or fall more than two percentage points in a period and does not rise or fall more than six percentage points during the mortgage loan tenure.

Balloon mortgage loans have three to ten year tenures, during which you pay the same amount each month. At the end of the loan tenure, you pay off the balance of the mortgage loan as one lump sum. Balloon mortgage loans are available at fixed or adjustable rates, but are considered highly risky because you end up paying off the interest on the mortgage loan and not the principal, and you stand to lose both the property and the money paid to date to the owner if you cannot pay off the loan balance at the end of the tenure or get refinance. If you want to save money by paying a lower rate of interest, are buying properties when interest rates are high, are sure of purchasing the property you want, are confident of refinance options when the balloon is due, or have no other choice, select a balloon mortgage loan.

This information should help you select the right mortgage loan. Check interest rates carefully before buying and you should be all right!

Joseph Kenny is the webmaster of the loan information sites Select Loans and also UK Personal Loan Store.

---

Online Mortgage in UK - Introducing the Best Mortgage Plan Across UK

Add the term 'online' and it will open for you... Read More

Council Right to Buy Mortgage ? Helping Everyone Have a Home of

"We will help every Council Tenant to become Home Owners"... Read More

Types Of Home Equity Loans

There are two broad types of home equity loans:Term loans:... Read More

Buying A Home? Reasons to Consider Financing Your New Home Loan Online

Financing your new home loan online can save you time... Read More

Reverse Mortgages ? a Reversal of the Mortgage Process

Mortgages have assumed a number of characters from the time... Read More

How to Compare Fixed Rate Mortgages and Adjustable Rate Mortgages

There are many types of mortgages, and the more you... Read More

How Much Home Loan Can I Afford?

Have you ever asked yourself how much home loan can... Read More

Refinancing Online - Tips For Getting a Low Interest Rate When Applying Online

Refinancing online is a great opportunity to find low interest... Read More

Home Loans

Buying a home remains the great American dream. Home ownership... Read More

First Time Home Buyer Loans Made Easy

When it comes to firsttime home buyer loans, a little... Read More

Securing a Cheap Home Improvement Loan

Finding a cheap home improvement loan can be a challenge... Read More

What is a Commercial Mortgage?

A commercial mortgage is a loan that uses commercial property... Read More

Refinance Your Second Mortgage

A 2nd mortgage is a secured loan on your property,... Read More

Bad Credit Mortgage Loans - Are You Killing Your Chances of Getting Approved?

When you have poor credit, your list of lenders that... Read More

Shopping for a Mortgage, Avoid Three Common Mistakes

Buying a home or refinancing one is perhaps the largest... Read More

Buying a New Home ? Home Buying Tips

If you in the process of looking for your first... Read More

Carolina Mortgage Loans

You're selling your home and are looking to relocate to... Read More

Adjustable Rate Mortgages Offer Alternatives For Home Buyers

When looking for a mortgage to meet your needs, consider... Read More

Types of Financing for Your Mortgage

When financing a home purchase, the kind of mortgage you... Read More

What Is The Best Deal For A Mortgage?

Few of us invest the time and effort into researching... Read More

Choosing The Right Mortgage For You

This article will help you understand the differences between a... Read More

Poor Credit Home Equity Loan Tips

A home equity loan can help repair your poor credit... Read More

Online Mortgages in 5 Easy Steps!

We're all entitled to the opportunities and benefits of home... Read More

Secured Lending - a Guide to Releasing the Value in Your Home

The recent boom in house price values have made some... Read More

Mortgage Pre Approval - Getting Pre Approved For a Home Loan Online

A pre-approved mortgage is a must in a competitive housing... Read More

How to Get Cheap Home Loans with a Bad Credit

It's been years since you made any major improvements to... Read More

Mortgage Refinance - Tips to Help You Cut Fees and Costs

Saving money through a mortgage refi is more than just... Read More

Shopping for A Mortgage? Do Your Homework First

If you happen to be shopping around for a mortgage,... Read More

Home Equity Loans Online

If you are in the market for a home equity... Read More

Home Equity Lines of Credit Vs. Other Conventional Loans

When it comes to getting money, you have two basic... Read More

Some of the Available Loan Types

There are many mortgage products available on the market today.... Read More

A New Choice for Home Financing: Correspondent Lenders

When you begin your search for a new home loan,... Read More

Online Home Equity Loans: A Basic Glossary

Home equity loans can be a great idea for individuals... Read More