Mortgage loans enable you to purchase a home over a period of time by making monthly payments. Because every home buyer’s situation varies, lenders generally offer a range of mortgage types with short and long terms, or fixed and adjustable rates. Super Saver 25 mortgages and Adjustable Rate Mortgages are two examples of the many mortgage products.
Super Saver 25
Super Saver 25 mortgages are built to include less overall interest compared to 30 year loans. Plus, a Super Saver 25 allows you to pay off your home five years quicker than a 30 year mortgage. The fixed interest rate of a Super Saver 25 offers low risk and a stable payment over the entire term. If you plan to stay in your new home for an extended time, fixed rates are usually the best choice, especially in today’s current low rate environment.
Why choose a Super Saver 25?
A 10 or 15 year mortgage loan’s monthly payment isn’t manageable for everyone. On the other hand, the idea of taking 30 years to buy your house may seem too long. A Super Saver 25 bridges the gap between a 15 and 30 year mortgage and cuts the amount of interest compared to traditional 30 year loan. For example, paying off your $200,000 mortgage five years faster saves you over $27,000 in interest and only increases your monthly payment by $101.
Adjustable rate mortgage
Adjustable rates mortgages are aptly named because the interest rate periodically adjusts, or resets, according to market rates. Adjustable rate loans bear more risk than a fixed rate mortgage due to the risk of your interest rate increasing (although the rate may decrease as well.) Some adjustable rate loans have rate caps which limit the increase in your payment after rates reset.
Why choose an adjustable rate mortgage?
Adjustable rate mortgages aren’t for everyone, but certain situations arise where these mortgage types are a good fit. Because adjustable rate mortgages often start with a period of lower rates, they may work well for those who anticipate relocating or selling their house prior to the end of the loan’s term. Another reason to consider an adjustable rate mortgage would be an anticipated future increase in income. In this case, the adjustable rate mortgage with lower payments in earlier periods may permit you to buy a home before your income rises. And, by timing your rate reset to match your future increase in income, you will be better equipped to handle a higher payment.
If you’re thinking about purchasing a home, the first step in the process is to get prequalified. Once you understand how much you can afford, you’ll be able to find a home in the Atlanta area and work with your lender to apply for the mortgage loan that works best for you.
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