The Best Mortgage Option for You
If you are planning to mortgage your house or property, this is a probably the most important financial decision you will make in a long time. The consequences of failure in this regard is so life-changing, you need to think it over and over again before finally deciding. So do your homework and take time to study your options before committing yourself to a lifelong decision.
Among the different mortgage options you can avail of, look for one that best suits your financial status. But mortgages can last for 20 years or more, before they mature. It is therefore important that you are aware of the implications of the mortgage agreement you will be entering into with the bank. You can get a good idea of what type is best for you if you look into some of the advantages and disadvantages of each type of mortgage agreement.
I have listed them below to help you make a choice.
But before anything else, you need to be sure why you are applying for a mortgage, what you need the money for. It is helpful to answer this first so you know what type of agreement is ideal for your situation.
1) Fixed rate or adjustable rate. If you are going to choose a fixed rate mortgage, then you will pay the same interest every month for the entire loan period. Would you rather have changing interest rates per month? The advantage in a fixed rate mortgage, the money you pay out is the same each month; while in the adjustable rate mortgage interest rates can go down, and you pay less for that period.
Majority of people settle for a fixed rate mortgage than for an adjustable rate. If you plan to stay forever in your property, a fixed rate mortgage is more suitable, otherwise, if you have plans on leaving the property, the adjustable rate mortgage is best.
2) Government insured or conventional. Next, you need to determine if you want a government insured loan or a conventional one. There is no government backing in conventional loans, but the advantage of government insured loans is that you get backed up by the government in case of mortgage failure.
3) The two types according to size are: Conforming or jumbo loan. What then is the ideal type based on the size of your loan: A conforming loan or a jumbo loan? How much money do you want to borrow, is it just a small amount or a very large amount? Conforming loans are ideal for loans of a smaller amount, while jumbo loans are more applicable to very large amounts.
If you want to safeguard your home or your property from loss, it is best to study your options carefully.