Sponsors: Current rates are still low by historical standards, but here’s what you can do to make them even more affordable.
(Adobe Stock | Utah Real Estate Resource Center, sponsored) Understanding your mortgage can save you big bucks.
Mortgages are probably not the most fun topic when buying a new home. However, having a proper grasp of what’s going on with a mortgage is the easiest way to save money for homeowners. The unusually low interest rates of the past few years are gone. Current rates are still historically low, but there are a few things you can do to make them even more affordable.
First and foremost, you should educate yourself about mortgages, but always consult with a licensed lender or real estate professional before deciding what to do.
Mortgages are divided into two main sources of funding: private lenders and the US government. Fees and terms vary greatly between the two. For example, if you are a veteran, you can get a loan through your VA. While the required down payment is significantly reduced, the obligations required of the home seller make this source of funding more difficult in completing the transaction. A private lender is usually classified as a bank or a mortgage his broker. Banks have products, but mortgage brokers can find mortgages from multiple sources. Both have advantages and disadvantages.
The mortgage itself usually comes in one of two ways: fixed rate or variable rate. A fixed rate mortgage gives you a set interest rate for the life of the mortgage. These mortgage types usually come with his two term options of 15 or 30 years. 15 years usually has a higher interest rate but a higher payment. However, if your goal is to save money overall, 15 years may be your best choice. The interest rate on a variable rate mortgage varies up and down over the life of the loan. The terms here can be as short as 3 years, but the interest rates are better than fixed rate mortgages. There are rate caps and limits that provide protection against the unexpected. If your new home isn’t your forever home, a variable rate mortgage makes the most sense.
The world of mortgages is complicated. There are many factors that affect the type of mortgage, the interest rate, and the amount of the down payment. There’s no way to figure it all out without asking someone who knows you well about what’s possible in the market.stop by AddressUtah.com to get some straight answers.
