25 Apr Mortgages 101
What You Need to Know About Mortgages
You’ve decided to buy your first home, yay! The next step people are giving you is to get a mortgage, but that is something you don’t know much about. Well in this post, we have assembled the basic, need to know items to help you start your process.
All a mortgage is, is a loan. It is as simple as that. It is rare for a person to have $750,000 just sitting around ready to buy a home. A mortgage will lend you the extra money you need in order to get the home you want. That may seem like a lot of debt to put yourself into, but the mortgage help you buy an asset that will only increase in value over time. Along with giving you a place to live, it is also a great tax break for you.
To start off with a mortgage, you will pay a down payment cost on the home, and the mortgage will cover the rest. Then over a set amount of time the loan is set up so you gradually pay it back with a little interest. To insure that you pay the money back, you put your home up for collateral. That way if you don’t pay your mortgage, the bank can take you home. Sounds harsh, but it is good incentive.
Finding the Right One for You
Doing your research to find the right mortgage program for you is very important. There are many different lenders that offer different programs so it is up to you to find that one that fits you best. Choosing the wrong program can cost you thousands so its important to find the right one for your needs.
Different Types of Mortgages
There are many different mortgage options, we are just going to breifly discuss the most common types here.
Fixed Rate Mortgage
Fixed rate mortgages are the most common and easiest loans in America. Some have called them a “staple” to home-ownership. These loans have a fixed interest rate and fixed monthly payments so that you never have to guess how much the bill will be with the ever fluctuating economy. The most common term for a fixed rate mortgage, is 30 years. They also come in 25, 15, and ever sometimes 10, but those come with higher monthly payments so most people choose to go for the 30.
Adjustable Rate Mortgage (ARM)
Traditional ARM’s have interest rates that change every year, every 3 years, or every 5 years. But the terms are shorter than the fixed rate, so you just trade off. Most traditional ARM’s offer initial interest rates that are lower than fixed mortgages, but then they could go up. They could also go down in a few years, so it is a. gamble with which way it could go. ARM’s are not available at all lenders offices though, so you have to make sure you have picked the right lender if you want one of these.
This mortgage gives you the best of both worlds from both the other mortgages. You will have a fixed interest rate for a certain period of time, usually 3, 5, 7, or 10 years, then the mortgage turns into a 1 year ARM loan.
VA mortgage loans are loans that are issued and guaranteed by the US Department of Veteran Affairs. These loans are offered to eligible servicemen and their families at lower rates and easier terms. To learn more about eligiblity, visit the VA’s website here.
Here at Staples, we want to help you find the right loan for you. We offer a variety of loans that we believe can fit most people’s needs. We also want to make sure that all your mortgage questions are answered and you feel comfortable with your decision. Feel free to talk with a member of our team and ask any questions you may have about our mortgage plans and what would work best for you. We look forward to hearing from you!
Click below to check out our offered loans!