Monday, December 11, 2006

Buying a House? Get Some Tips About Mortgage

Many people make a lot of mistakes when they buy a house. They forget that there are huge costs associated with mortgage plans. As Fowles writes, a mortgage of $125,000 at 8% for 30 years will cost you a total of $330,000!!!!

Many people fail to see this and are easily enticed by the dream of getting their own home. However, such a mortgage will have huge interest costs. So, you have to be careful to choose the best mortgage plan available in the market depending upon the economic situation and its future prospects along with your own future income prospects.

So, what are the options? There are quite many options and various offers are made by different institutions. I will write in brief about a couple of those.

Fixed Rate Mortgage
These loans have a fixed interest payment over the loan period. Usually, this is good for those who do not want to take risk of adjustable rate mortgage and want to keep their expenditures fixed. You might have to pay relatively more as you are being risk-averse out here.

Jumbo Loans
This is usually for those people who want a substantial amount of loan. Make sure you are capable of paying this off. You feel good when you get the loan but paying off is always a pain. So, think twice before taking a large loan.

Adjustable Rate Mortgage
These loans have a variable interest which changes depending on the market interest rate. However, there is usually a cap as to how high it can go. This is usually for those who want to take the risk and those who believe future interests may not rise that much and hence, they might actually end up paying less in aggregate.

In any case, I suggest that you explore the alternatives and get the best rate. Mortgage rates have gone down recently and hence, make sure you are not losing the opportunity to refinance your mortgage.