With so many loan options available, finding the right mortgage can be confusing. But there is one that's perfect for you. And we can show you the best choice in just minutes.
Most Common Mortgages
Out of the mortgages available, fixed rate 30-year and 15-year are the most common. They offer the security of a fixed interest rate for the duration of the loan, making it easier for you to budget your expenditures year after year. Another popular option is an Adjustable Rate Mortgage (ARM). ARMs offer lower interest rates than fixed rate mortgages. However, the ARM rate will adjust at some point depending on the length of your mortgage (ARM mortgages are available in varying lengths including 2-, 3-, 5- or 7-year durations). When the ARM rate does adjust, the rate will typically be higher than a fixed rate mortgage. So it's important to consider how long you'll be in your home. If you're only going to be there for a few years, then an ARM may be the perfect choice for you, possibly saving you up to hundreds of dollars per month. Keep in mind, though you can't be absolutely certain where the market will be a few years down the road. Selling or refinancing then may eat up the savings you were seeking by selecting an ARM. Confusing? Stop in or call and we'll be happy to help you determine which option is best for you.
Paying Discount Points versus Higher Rate
What about paying points vs. getting lower interest rate? That depends on a number of conditions, such as your financial situation, your goals and how long you'll be in your home. As an example, consider a 30-year $100,000 mortgage. Paying $3,000 at closing for 3 points and a 6.5% interest rate gives you monthly payments of $632 and total interest payments of $127,544. On the same loan, with no points paid and an interest rate of 7.5%, your monthly payments will be $699 and total interest payments total $151,717. The break-even point in this example on paying the points is 3 years and 9 months. To figure this out, take the $699 monthly payment without points minus $632 monthly payment with three points paid to get $67. Then divide the $3,000 spent on three points by the $67 monthly savings and you end up with a 45 month or 3 years and 9 months break-even point.
We can put it all in perspective for you so you can make the decision that benefits your financial mortgage needs most.
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