When financing a home, you have a lot of choices, including the term of the loan. It’s estimated that 80 percent of all home buyers elect to take out 30-year fixed-rate home loans. It’s a popular option because of the low monthly payments.
Less popular are 15-year and 10-year fixed-rate home loans. The big downside with these shorter-term options are the higher monthly payments. With a 15-year home loan, for example, you can expect to have a monthly payment that’s 28 to 30 percent higher than with a 30-year home loan. And, you’re locked into paying that higher payment. The main advantage of a shorter-term mortgage is the earlier payoff and substantial savings. You’ll pay your home off more quickly and pay significantly less in interest over the life of the loan.
In addition to fixed-rate mortgages, home buyers also have a variety of ARMs to consider. Primary Residential Mortgage, Inc.’s ARMs allow you to get into your home with a low monthly home loan payment. This loan program lets you enjoy a fixed rate for the first few years, which then increases every year based on a particular index value.
Today’s ARMs are often based on a 30-year repayment schedule with a period of five, seven or 10 years that the loan’s interest rate remains fixed. After that period, the rate adjusts. After the adjustment period begins, the loan’s mortgage rate — and the monthly payment — could go up or down.
Is an ARM right for you? If cash flow is a concern, the lower mortgage payment required by ARM may help you manage your monthly obligations. It also may work well if you aren’t going to live in your home for many years. If you know that you will be moving due to your career or for other reasons, an ARM may be a good option.
At Primary Residential Mortgage, we are dedicated to helping our customers find the loan — and loan term — that’s right for them. Contact us today to explore all of your financing options. Start by visiting our website: http://www.ginamccarty.com/.