Which Mortgage is Right for You?

When shopping for a mortgage loan, one size does not fit all. It’s important to understand your options and how they will affect your budget.

Below are some important considerations for deciding what kind of mortgage loan is right for you.

Adjustable vs. Fixed

One key decision is whether to select a fixed-rate loan or an adjustable-rate loan.

  • Fixed:
    • Keeps the same interest rate for the life of the loan- your monthly payments of principal and interest will not change.
    • Because of this stability, fixed-rate mortgages can help you plan your finances far into the future.
    • They also can be attractive when you’re able to lock in a low rate in a volatile market.
  • Adjustable:
    • Typically offers an introductory period- for example, five years- with a rate lower than you could get with a fixed-rate loan.
    • After this period, the rate adjusts annually based on the financial markets.
    • Adjustable-rate mortgages can be a less expensive option if you don’t plan on living in a house for very long.
    • You can also take advantage of falling rates without refinancing. Of course, if rates climb, you could owe more in later years.


How long?

You might think that a 30-year mortgage is your only option, but 15-year mortgages are also available to many borrowers.

  • 30-Year
    • Lower monthly payments
    • Longer payment time
    • Higher overall cost of mortgage (more time = more total interest)
    • Lower monthly payments could allow you to use money to pursue other financial goals.
  • 15-Year
    • Higher monthly payments
    • Shorter payment time
    • Lower overall cost of mortgage (less time = less total interest)
    • If you can afford to pay off a mortgage sooner, a 15-year loan might be a better choice.


Finding Your Loan

These are just a few of the options available to finance your home purchase. The mortgage that’s right for one buyer might not be right for another. Be sure to talk to your lender about your life and plans to make sure you get the loan that is best for your situation.



Information and guide from texasrealestate.com.