| There are a confusing number of types of mortgage | | | | Mortgages vary in terms of how much money you |
| loans available to borrowers today. Some borrowers | | | | need as a down payment. In the past, most all |
| tragically have signed mortgages in the past containing | | | | mortgages needed 20% down payments. Some |
| terms which they did not understand. Many blame | | | | exceptions existed such as the FHA loan program. For |
| mortgage brokers for misleading borrowers. However, | | | | a period in recent history many lenders lowered this |
| every consumer needs to be armed with the | | | | requirement. Some lenders even routinely wrote |
| information needed to fully understand the proposed | | | | mortgages with no money put down by the borrower. |
| mortgage terms on their own. | | | | This might seem attractive to you. |
| Some mortgages have what are called fixed interest | | | | However, with no initial equity the loan can become |
| rates. You get an initial interest rate and it never | | | | quite risky. If your home should decline in value, then |
| changes during the course of the loan. If rates | | | | you could be in a scenario where your home's value is |
| decrease and become much lower than the one you | | | | less than the amount you owe on your mortgage. You |
| have, then it is always possible to refinance sometime | | | | then become essentially trapped in your home with no |
| in the future. A fixed rate is good because it allows | | | | escape. Having initial equity is a smarter and safer |
| you to budget accurately for your housing expense. | | | | choice. Most experts recommend putting down 20% |
| Other mortgages have what are termed adjustable | | | | of the purchase price as your down payment. |
| rates. Interest rates on these loans can go up as | | | | Many mortgages have complicated closing fees and |
| market interest rates increase. Some have built in | | | | "points" associated with them. These can increase if |
| "teaser rates" which offer a very low initial payment | | | | your credit score is not acceptable. Ideally, a borrower |
| which greatly increases after a given period of time. | | | | avoids mortgages with these types of high fees. All |
| These type mortgages can be very risky. Many | | | | mortgages entail some fees at closing. When looking |
| borrowers who selected these loans found out that | | | | for a mortgage compare these fees when shopping |
| they could not afford the new payment after the | | | | around. Don't just exclusively focus on the interest rate. |
| amount increased. You should ensure this never | | | | Points and fees can make an otherwise attractive |
| happens to you. | | | | loan become much less desirable. |
| Historically, most mortgages had terms of thirty years. | | | | Pay attention to the different types of mortgage loans. |
| After thirty years of payments a celebration would | | | | Each term is important and should be researched and |
| ensue burning the paid off mortgage papers. More | | | | studied. Do not rely upon others to explain terms to |
| recently, terms of 40 years or longer have emerged. | | | | you. There are many free resources available online |
| Most experts assert that you are better off sticking | | | | which enable you to become a smart mortgage |
| with a 30 year term. If possible, it is even better to | | | | borrower on your own. Do your research and pay |
| seek a 25 or 20 year term assuming you are able to | | | | attention to the fine print. This will ensure you avoid |
| meet the higher monthly payment amount. | | | | common mortgage pitfalls. |