Boston Real Estate and the Key Points to Remember:
- As mortgage rates continue hovering near historic lows, many potential buyers are eager to make a move—but it can be hard to know which type of loan is best.
- There are dozens of different mortgage options available today, and some even have low down payment or credit score requirements. This can help a variety of buyers finally achieve their real estate goals.
- Need help finding a lender or choosing the right mortgage for your needs? We’d be more than happy to offer a few recommendations.
Let’s face it—understanding mortgages can be the most complicated part of buying a home. Even experienced buyers sometimes have trouble deciding between lenders or shopping around for the best interest rate. And because there are so many options, it can be difficult to track down the mortgage that best meets your needs.
There are a variety of factors you should consider before committing to a loan, such as your income, debt, financial history, and how long you plan on staying in your new home. But if you play your cards right, you could end up scoring a great deal. Here are some of the most popular types of mortgages, as well as their pros and cons.
A fixed-rate mortgage is the most basic and reliable type of home loan you can get. Your interest rate and the monthly payment will stay the same for the entire duration of the mortgage, and you’ll likely have to put at least 20% down and have an established financial history to get approved.
Typically, fixed-rate mortgages are broken down into 15- or 30-year terms. If you want predictability and don’t plan on moving for a while, this is probably the best option for you.
Unlike their fixed-rate counterparts, adjustable-rate mortgages offer the initial benefit of a lower rate and down payment. However, ARMs fluctuate with the market, which means your interest rate and monthly payments could increase or decrease over time.
While there is more risk involved with an adjustable-rate mortgage, it can be worth it if you plan on living in your home for a shorter period of time. Generally, ARMs have a capped introductory interest rate for the first few years, which can save you quite a bit of money compared to a fixed-rate loan.