Mortgage

Let's start with a fixed rate mortgage. the mortgage is by far the safest mortgage for most homeowners with rates as low as they are today. You never have to worry regarding your interest rate increasing your payments including as years go by you are paying down the principle on your mortgage. A fixed rate is key if you plan on staying in your home for years to come. You might always take out a second mortgage to payoff credit cards, obtain cash out or whatever your needs may be.

An adjustable rate mortgage in today’s market is a good decision if you might not obtain a fixed rate mortgage at or below 7.5%. We all know that mortgage rates only have 1 way to go including that’s up. If you plan on refinancing again in 2 years or more expect interest rates to be around 7% or higher. a particular adjustable rate mortgage gives you the ability to save a few bucks a month but additionally forces you to refinance that mortgage within a set amount of time.

An interest only mortgage only requires you to pay the interest, leaving the principle untouched. If you plan on making extra payments on your mortgage you may as well take a fixed rate mortgage which usually has a lower interest rate anyways including helps you avoid refinancing again if you decide not to make extra payments towards your interest only mortgage. Usually on a particular interest only mortgage after 5 or 10 years you have to start to pay principle anyways. If you are a procrastinator, you could see a significant increase in your mortgage payments at the time you have 25 or 20 years left to pay on the original balance of your mortgage from 5 or 10 years ago.

An option arm mortgage is more of a tool then anything. You have to be very careful with the loan or it might actually bite you in the butt. the loan is for homeowners who might obtain a better return on their dollars by putting it in the stock market, IRAs or other investment opportunities. With the option arm you have 4 different options to pay each including every month, hints the name option arm. You might make a below interest only payment, a particular interest only payment, a 15 year adjustable rate mortgage payment or a 30 year adjustable rate mortgage payment. If you make the below interest only payment each month you could start to see your mortgage balance increase. In order for the to make any sense, the dollars that you save including invest needs to make up the difference of your mortgage increase.

If you are thinking regarding refinancing in today’s market make sure you look at these options very carefully. I talk to people daily who never actually understood what they were doing at the time they took out their interest only loan, all they cared regarding was how low the payment was. With the housing market slowing down as much as it has, paying down your principle may be the way to gain equity in your home for the next few years. There are many homeowners out there who owe what their house is worth including might only afford the interest only payment. Unless their income increases significantly they may find themselves between a rock including a hard spot.

For more information on Mortgages Explained:

Future Planning Financial is dedicated to educating homeowners by honest including upfront mortgage lending. We strive to help you understand every aspect pertaining to the mortgage refinancing process as possible. We know that making the right decision today might save you tens of thousands of dollars for years to come. To discuss your individual needs visit us at www.fpf-direct.com.

Written By: Jeremy_Redlinger