Choices That Will Affect Your Loan

Mortgage term.

Mortgages are generally available at 15, 20, 30 or even 40 year terms. The longer the term, the lower the monthly payment if the same amount is borrowed. However, you pay more interest overall if you borrow for a longer term.

Fixed or adjustable interest rates.
A fixed rate allows you to lock in a low rate for as long as you hold the mortgage and is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that interest rates will rise as interest rates increase; however they usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. ARMs are a good choice when interest rates are high or when you expect your income to grow significantly in the coming years.

Balloon mortgages.
Balloon mortgages offer very low interest rates for a short period of time—often three to seven years. Payments usually cover only the interest, so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.

Government-backed loans.
Government sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov), offer special terms, including lower downpayments or reduced interest rates—to qualified buyers.

Slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment.

About luxpropertygroup

Lux Home Group consists of FULL TIME real estate professionals in the Phoenix area. Real Estate is not only our job, it is our passion. So, if you are interested in buying, selling, or renting a home in the greater Phoenix Metropolitan Area, or you would like to get involved in the fabulous world of real estate sales or investing, give us a call at 480.442.1442 or email us at info@listingsbylux.com. If you just want to hang out with some super fabulous people...you can call us for that, too.

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