Buying a home is an important decision. You want to make sure you choose one you would like to live in for at least a few years. The next important decision is choosing the right mortgage company in Salt Lake City such as Altius Mortgage Group from which to borrow money.
With that done, you need to choose the right mortgage type. This can be a little tricky. All mortgages have their good and bad sides. The thing you have to do is manage your risk.
Here are some things you need to consider.
Most people like to draw out their payments as long as possible. A 30-year mortgage may seem a lot better than a 20-year mortgage because of lower monthly payments. However, you need to consider just how much lower that will be.
Presuming a 10% down payment on a $200,000 home, the monthly payment for a 30-year fixed-rate mortgage at 4.36% interest is $897.12. For a 20-year loan at 4.3%, that is $1,119.43. You “save” 222.13 a month. However, at the end of the loan, you would have paid a total of $322,963.20 for the 30-year loan.
You would only have paid $268,663.20 for the 20-year loan. That is a difference of $54,300. That can work if you use the $222.13 you save monthly to make more money. Otherwise, that is just money down the drain. Go for as short a mortgage term as you can manage and save on the interest payments.
Some people swear by the fixed-rate mortgage. Others are confident that the adjustable-rate mortgage is better. In either case, it boils down to your ability to predict the market. If you think the interest rates will go down during the term of your loan, the adjustable-rate mortgage is a great idea.
However, if you do not know, either way, a fixed rate can give you peace of mind.
The down payment
No or low down payment mortgage rates might seem like a great idea. However, this does have an effect on the amount of equity or the cash value of the home. If home values go down in the first five years of your mortgage, you will not have enough equity in your home to get refinancing or to sell it without losing money.
Homebuyers have many choices when it comes to choosing the right mortgage. This advice will come in handy when you speak with your mortgage company about what you want.