Do You Really Know Your Mortgage?

Do You Really Know Your Mortgage?
By [http://ezinearticles.com/?expert=Alfred_Ardis]Alfred Ardis

If you are in the market to buy a home, you are most likely looking at getting a mortgage as well. You can get financing for your home from your bank or loan provider. There are many different options when it comes to loans of this nature, and if you are not aware of all your options, you could find yourself spending too much money. Let's explore the different types of financing options for your home.

When it comes to getting a loan for your next home, there are several different options to consider. There is the fixed rate, which is simply a loan that does not appreciate or depreciate in terms of value. For example, if you agree upon a ten-year loan with a rate of five percent, that rate will not change over that period of time.

There is also the adjustable rate mortgage or ARM. ARM's come in a variety of different packages. You could have a one-month ARM that adjusts monthly, after a three-month introductory period. You could also get a six-month ARM that adjusts every six months. There are many more options for ARM's that vary in length of term and adjustment period.

A two-step financing plan is popularly broken down into two options, where the rate remains fixed for five years and then adjusts to a figure that then remains fixed for the next twenty-five years. The other option that is common is seven years and then a single adjustment, which is then locked for the next twenty-three years.

If necessary, you can take a second mortgage on your house. For example you could take one mortgage on seventy five percent of your house, and then take a second one on the other fifteen percent of your house. Taking a second loan on your house can diversify your risk and also lower your first mortgage.

Depending on your loan agreement you may have the option to refinance. Doing this should only be done when the cost of refinancing can be recovered before you sell your home, or if you can refinance to a low enough rate that the costs of doing such can be covered in your new rate.

If you find yourself with a rate that you think can get no lower than it already is, you should look into getting your rate locked. However, you should only do this if you are entirely certain your rate cannot get any lower, as locking your rate is always a gamble of sorts.

Figure out more about what kind of loans and rates you can get, and visit your lender today.

When considering financing a mortgage, Grand Rapids residents can learn more at [http://www.communitywestcu.org/loans_mortgage.asp]http://www.communitywestcu.org/loans_mortgage.asp.

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