When you are ready to buy a new home, you likely want to jump right in and go straight to finding the home of your dreams; however, there are other things to consider. Financing can be a big concern for many would-be home owners. Some are curious about what options are available to them, while others worry about if they can even get financed at all.
To answer the first concern (the second concern is more about each individuals situation,) there are several types of mortgage loans available for you to choose from. The most popular type is a fixed mortgage loan.
A fixed mortgage loan is the type of loan that most people financing a home ask for. There are many characteristics that, when taken together, help identify a fixed mortgage from other types of loans, such as balloon mortgages or ARMs. Some identifying traits include:
Payments on a fixed mortgage loan remain constant throughout the life of the loan. You will pay the same amount each and every month until you have repaid the entire amount.
You can take out a fixed mortgage loan for up to 30 years. How much you pay each month will be determined by the ‘life’ of your loan. For example with a 30-year fixed mortgage loan, the mortgage company will take the total amount of your loan (principle + interest) and divide it by 360 months (the total number of months in 30 years) to arrive at your monthly payment amount.
Your interest rate will also remain constant throughout the life of the loan.
This type of loan is the most stable and predictable, which is a big reason why it is favored by so many home owners. Once you have secured your financing, the only thing left to do is to find your new home.
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