Some of the Best Ways to Get the Lowest Mortgage Payment Possible
Ever wondered how the calculation of rates for mortgages are made? Do you know what type of mortgage loans have easier or more lenient terms of payment? Is it possible that one mortgage payment is riddled with less fees when compared to another? What strategies can I employ to get the lowest mortgage payment possible?
If You Plan On Living in the Property for 10 Years
If you plan to live in the property for ten years, then you can choose any of these mortgage types: a fixed rate mortgage, 10/1 year adjustable rate mortgage, or a '30 due in 7' mortgage.
A fixed rate mortgage basically has monthly payments and an interest rate that are the same throughout the terms of the mortgage. It does not change throughout the term of the loan. A 10/1 year, adjustable rate mortgage, has a monthly payment and interest rate that stays the same for a period of ten years, and adjusted based on the originally agreed upon terms in the eleventh year. The '30 due in 7' mortgage, on the other hand, has a monthly payment and interest rate that stays the same for a period of seven years. After seven years, the rate will be adjusted based on the prevailing interest rate. all other things being equal, it is usually better to go with the best fixed rate mortgage.
If You Plan On Living in the Property for 7 Years
If you plan to live in the property for seven years, then you can choose any of these mortgage types: a 7/1-year adjustable rate mortgage or a 7-year balloon mortgage.
A 7/1-year adjustable rate mortgage has its monthly payment and interest rates set at a stationary rate for seven years. On the eighth year, they adjust the to the current prevailing interest rate. The 7-year balloon mortgage plan holds the same interest rate and monthly payment for a period of seven years. The catch here is that after the seventh year, the borrower must pay the remaining balance in full, or refinance the loan under new terms with a different interest rate.
If You Plan On Living in the Property for 5 Years
If you plan to live in the property for five years, then you can choose any of these mortgage types: a 5/25 (2-Step) or '30 due in 5' mortgage, 5/5 or 5/1 year adjustable rate mortgages, and the 5 year balloon mortgage.
The 5/25 (2-Step), commonly known as '30 due in 5' mortgage, has its monthly payment and interest rate set for five years. On the sixth year, the borrower has the following conversion option: adopt the prevailing interest rate of the current year, and payments will remain at these levels for the rest of the duration of the loan. 5/5 & 5/1 year adjustable rate mortgages, on the other hand, is much the same as the previously described loan program. But, in place of its conversion option, the interest rate will adjust every five years for 5/5 ARM, and every year for 5/1 ARM. Lastly is the 5 year balloon mortgage. As with the other types of mortgages described above, this type of loan has set payments for the first five years. Once that period of time is up, the borrower must either pay the remaining loan amount in full, or refinance under a new loan agreement.
These are only the few of the many options for mortgage plans that you can choose from. Finding the best mortgage plan, despite being detailed meticulously, is still up to you. It is still just a matter of choice.
About the Author
Oliver Silverstones makes it easy for the first time home buyer to find all the state and local first time buyer programs. He keeps an update of the best fixed rate mortgages daily, as well as providing great advice to avoid most first home buyer headaches.