Finding the right home loan.
Just as you shop for a home, it is important to shop for what type of loan will be best for you and your family.
The Lawhead Team would like share some common home loans and why they are beneficial. If you have any questions about applying for a home loan, please call us and we would be happy to help steer you in the right direction.
30 Year Fixed – A 30 year fixed is a loan where interest and mortgage payments remain the same for 30 years, at which time you will have paid back the entire loan. This is good for those who prefer the security of fixed-monthly payments like fixed-monthly mortgages. Often, this loan is more expensive than its adjustable-rate counterparts, but is easier to understand and provide the greatest payment stability. If you can afford this loan and plan to be live in your home for 10 or more years, this may be the best option for you.
15 Year Fixed – These are mortgages where interest and mortgage payments remain the same for 15 years, at which time you will have paid back the entire loan. These loans offer the lowest fixed rates but have the highest monthly payments because you are paying off the loan in a shorter time-frame. This is good for those who prefer the security of fixed-monthly payments and can afford the higher monthly payments of a 15-year term like this loan. You will build equity quickly, but the high monthly payments may restrict the overall price of the home you can afford.
ARMs – Adjustable-rate mortgages (ARMs) are mortgages where the interest rate you pay adjusts at a specified time and frequency. There are many different ARM products, but generally they offer a lower initial rate than a 30-year fixed and they adjust with market trends. Therefore, when your initial rate period ends and your ARM is ready to adjust you may be paying more (with higher current market trends) or less (with lower current market trends) than your initial rate. Generally, ARMs follow this pattern: the shorter the initial term, the lower the initial rate.
Interest Only – These are fixed or adjustable rate mortgages where you the option of paying interest only for a specified term, usually five to ten years. After the initial term the mortgage switches to a fully-amortizing loan for the remainder of the loan. This is good for people who expect their financial situation to change in the near future. Young professionals like doctors and lawyers may also prefer this loan since they believe they will be making significantly more money in the future than they do now.
Payment Option “flex pay” – These are mortgages where you have the option of paying different amounts each month. Usually, the monthly payment options include a low payment option, an interest-only option and an interest plus principal option. The low payment option creates negative amortization and usually adjusts yearly with a maximum rate cap. This is good for people that do not have steady incomes may like this loan. It provides the most flexibility from month to month.