We go out of our way to provide information on the ongoing changes in the mortgage industry that could shape your decision, and to stay up to date on the many types of loans that are available.
Our goal is to help you find the mortgage that’s right for you – here are some key factors we will consider before suggesting a mortgage:
- Are you a first-time homebuyer?
- Are you self-employed? How long have you been self-employed?
- How is your credit history? Could you/should you focus on making improvements?
- How long do you plan to own the home? Just a few years? 5 Years? 7 Years? Forever?
- Are you a good saver?
- Will you have adequate funds available after buying your home for continued retirement saving?
- Do you have future financial obligations – such as college, retirement, child care, or elderly care – that might limit your future ability to meet debt obligations?
- How large a down payment are you willing or able to make?
- What is your liquid asset position now? With focus, could you save more to put yourself in a better position in the future?
- How might your financial outlook change over the near-term and long-term?
- Are you comfortable with a payment amount that could change in the future?
We will discuss these issues and more in your pre-approval meeting.
One of the first considerations is whether to choose a Fixed or Adjustable rate. Fixed rates are available in terms of 10, 15, 20, 25, and 30 years – and any increment in between 10 and 30 years. If you have 23 years left on your 30-year Fixed Rate mortgage, and you are refinancing to a new lower rate, you have the option of choosing a 23-year term with the new mortgage, so you don’t start another 30 years all over again.
The 30-year Fixed Rate is certainly the gold standard, but do you need a loan for 30 years? If you don’t, it could be wise to consider an Adjustable Rate Mortgage if the ARM rate is lower.
There are many reasons that you might not have your mortgage for 30 or even 15 years…and this isn’t information you will have unless you have a crystal ball. The reasons you may not have your mortgage for 30 years are many…people trade up to larger homes, trade down to smaller homes, are relocated by their employers, relocate to a different city, refinance to get a lower interest rate or to consolidate other debt, or to get cash to pay for home improvements, to remove an ex-spouse from obligation on the mortgage, and more.
The most common types of Adjustable Rate Mortgages have a fixed period of 5, 7, or 10 years. This number represents the number of years where the interest rate is constant at the initial interest rate. After that period is over they begin to adjust, and continue to adjust annually. After careful consideration, many people choose Adjustable Rate Mortgages that match the time period they expect to own the home – if they benefit from a significant cost savings vs. a Fixed Rate.
The best choice in my opinion is the one you are most comfortable with. After we discuss how long you expect to own the home, I can help you make an intelligently evaluated decision.