Mortgage: Getting The Best Deal

Mortgage: Getting The Best Deal

Mortgage: Getting The Best Deal

When getting a mortgage loan, you will want to try to get the lowest interest rate possible. Since the goal is to spend as little on interest as possible, you will also want to choose the shortest term you can possibly afford. The term of a mortgage loan is how long you have to pay off the loan. With a shorter term, you will have higher payments, but more of your money will be going toward the principle of the loan (the actual cost of the property, and everything on that property), and less of your money will be paying off interest. Therefore, not only will you have your property paid off much faster, but you will have saved a ton of money! With a longer term, more money is paid toward interest and less of your money is paid toward the principle. Your payments will be lower, but by the time you have paid off your loan, you would have spent a lot more money than had you gone with a shorter term.

With mortgage loans, there are two main different types of interest rates; adjustable and fixed. An adjustable interest rate (otherwise known as an ARM, standing for adjustable rate mortgage) means that the interest rate can adjust itself according to the interest rate of the current housing market. Lots of times, getting an adjustable interest rate will give you a lower interest rate at first, but then it can jump really high during the course of the term of the mortgage loan. Many times, however, an adjustable interest rate can have a cap on it, meaning that it will never go above a certain interest rate. If that cap is low enough, it may be wise to choose this option. If you are able to get a very low interest rate to start out with, however, and have the option to make that a fixed interest rate (one that never changes during the course of the term unless you refinance), then that would be worth looking into.

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