The
fundamentals
of
Personal Credit
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The
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When purchasing or refinancing your home take some time to consider some alternatives to the standard 30-year fixed rate mortgage loan. There are factors such as your current credit situation, your time in the property and how much you can afford each month which should guide your decision regarding the term of your mortgage loan. You may have some credit that is less than perfect a two or three year fixed rate mortgage may be ideal. These are 30-year loans that have a fixed rate for two or three years and adjust up after that. Some call these transitional loans because your interest rate for the first two or three years is much lower than that of a 30-year conventional mortgage. When you re-establish your good credit during this initial fixed rate period (at least 24 months) you will be able to, in most cases, refinance at the best available rates at or before the time of the first rate adjustment. Along with qualifying for the best rates your new loan should cost should be very small. This is a very good way to save money while improving your credit rating.
Low-Rate Mortgage & Home Equity Loans Other alternatives include five or seven year fixed rate mortgages and fifteen or twenty year mortgages. Many people in America are staying in their homes for less then 7 years. In this case a 5 or 7-year mortgage makes sense because the rate is usually ½ - ¾ of a percent lower in their interest rate, possibly saving as much as $6000 over 5 years for the average person. These like the 2 and 3-year loans mentioned above are 30-year loans with an initial fixed rate, which becomes adjustable after the 5 or 7-year term. It seems that a 15 or 20-year mortgage is great if you’re not planning on moving and want to pay off your home loan as quickly as possible. Of course the payment will be greater than a standard 30-year mortgage but you will save in interest and the rate will normally be lower. If you have additional cash to put towards your mortgage and want to pay your mortgage off quickly, this may be the right choice for you.
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