When searching for a home loan, you will likely come across a number of home loan programs; some of which you may be eligible for, some of which you may not. In addition, you will likely encounter two different types of mortgages: fixed-rate mortgages and adjustable-rate mortgages. The type of mortgage you choose will be dependent upon a number of factors, and the type of mortgage that is right for you may not be right for another individual.
In order for you to fully understand the type of mortgage that is best for you, it is best to compare them, side by side:
- Fixed-rate mortgages – Most homebuyers choose a fixed-rate mortgage because they are usually relatively straightforward. A fixed-rate mortgage is a mortgage that features the same interest rate throughout the life of the loan for the St. Johns County property; hence the term “fixed.” This essentially means that, regardless whether you are in the first or the twentieth year of your loan, the interest rate and the home loan payment will remain fixed. Many people prefer a fixed-rate mortgage because there are no surprises and it allows them to better plan ahead financially.
- Adjustable-rate mortgages – Adjustable-rate mortgages, although they’ve gotten a pretty bad rap over the last, few years, actually make good sense for some home buyers. An adjustable-rate mortgage is a mortgage that features changing interest rates at certain periods throughout the life of the loan. The first few years of the loan will often be a fixed period, during which the interest rate will remain the same. However, depending on the type of adjustable-rate mortgage, the interest rate will “adjust” after so many years, and may adjust again every five or ten years, for example. Most people choose adjustable-rate mortgages when they don’t plan to stay in the home for an extended period of time because most adjustable-rate mortgages feature lower, initial interest rates.
Whichever loan you choose, make sure to get advice from a qualified lender who can help guide you through the home loan process.