With plenty of mortgages to choose from, If you’re looking to purchase your first home you may be wondering, what type of mortgage is right for you?
What Is a Mortgage?
The simple definition of a mortgage is: “the lending of money.” They’re commonly used to help individuals or families purchase a home. Interest rates are important when you’re thinking about obtaining a mortgage. The rate is an average that the lending institution charges, so knowing the interest rate you’re offered is critical to figuring out how much you can afford to borrow. This is the amount you’ll end up paying to borrow a specific amount of money. Interest rates also determine how much you’ll pay in interest over the course of the mortgage term (usually about 30 years). How are mortgages paid back? Interest is paid out in a monthly payment schedule, with the smallest amount of money being paid at the beginning, the highest amount being paid at the end.
Types of Mortgages
The type of mortgage you choose is very important. There are a number of different kinds including:
- Step-Up Loan- Like a HELOC, a step-up loan gives you more time to pay off your mortgage. It differs in that it’s higher interest than a HELOC because the HELOC uses an interest-only or tax-free period to pay down the loan. A step-up loan requires a higher percentage of your income. It also has a closing cost.
- Investment Mortgages– Investment mortgages differ from regular mortgages in that you don’t own the property at the end of the term. You borrow the amount you need to buy the property. The good thing about investment mortgages is that they usually come with lower interest rates and smaller fees. You can also expect the property to increase in value over time as the mortgage is paid off over time. Essentially, this type of mortgage is great for people who are looking to make a quick profit on the property. They’re usually perfect for people who are looking to buy a house to rent out as well.
- Home equity loans- Home equity loans are normally used to pay for the purchase of the property.
Choosing the right mortgage can be challenging. It’s important to work with a knowledgeable lender who is going to help you find the right fit. Having a mortgage with the right terms will help you afford the mortgage payment you have while not adding an excess amount of monthly payments that you can’t afford to make. When you are considering purchasing a home you should contact a mortgage lender as soon as possible. The sooner you’re able to look at different types of mortgages and get an understanding of which one will work for you the better. Contact us today to find out more about the home loan options available to you.
Contact Utah Sell Now
Before you figure out what type of mortgage is right for you, you’ll need to sell your old home or property. That’s where Utah Sell Now comes in, we buy homes in any condition fast and in cash so you don’t have to go through the hassle of using a real estate agent or making costly repairs. Contact us today to get your written no-obligation offer for your Salt Lake City, Utah, home, and you could have cash in hand for your house in as little as seven days.