Buying your new home is a very exciting and sometimes quite overwhelming period in your life. Finding the perfect property is merely the first step. The second step is to select just the right mortgage to suit your requirements and your budget. There are many different types of mortgages that are available, some for first time home buyers, some for veterans, and some for regular citizens. Most home loans differ on length of the loan and rate. The interest rate that you get on your home loan is a very crucial financial indicator of your current and future budget.
Differences in Home Loan Interest Rates
Current mortgage interest rates are on the rise again. With the current state of the economy, a home loan rate comparison could help current home owners pay more towards principal on their home loans. Those people on interest only mortgages are seeing significant reductions in their home loan repayments. Depending on the current mortgage interest rate that you are looking to obtain, taking advantage of this current economic climate can help keep your interest charges low for the length of your mortgage.
Your mortgage interest rate can be fixed, variable, or a mixture of the two. A fixed rate is just that, fixed. It does not move. If you select from fixed mortgage rates and rates drop, this is a disadvantage. You are still paying the higher rate. However, if your rate is fixed and interest rates rise, you are at an advantage. You do not have to pay as the interest rate increases. If you are most likely going to stay in the home you are buying for more than 5 years, you should seriously consider a fixed rate mortgage. This will allow you to pay down the principal on your debt. The way that a loan amortization schedule is set up is that during the initial 5 years of the mortgage, the majority of your repayments will be allocated to paying off interest, and only a small portion is allocated towards principal. If you do not plan to stay in your house longer than 5 years, then perhaps an interest only mortgage may be the best option for you. You can pay as much towards principal as you would like, but you can use the extra money saved to renovate the house and increase the value.
If you have special status, you may qualify for special home loan rates. Those people with special status often include first time home buyers, veterans, civil servants, and those on disability. Special status often times will allow people to pay a lower interest rate and lower bank fees. Special status home loans may also have different mortgage lending criteria. For example, the deposit requirement can be significantly reduced, and often times there can be discounts on taxes and fees. Be sure to find out whether you are able to apply for a special status home loan, as there are many advantages involved.
If you are considering applying for a mortgage-buying a home or property, remember to make sure that you understand all of the financial home loan products available to you with a full interest rate comparison. Make sure that you understand the different mortgages available and choose those one that makes the most financial sense for you and your future plans.