| There are three major types of home
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| | introductory interest rate followed by an
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| mortgages - fixed-rate mortgages,
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| | interest rate that's based on the market
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| adjustable rate mortgages and alternative
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| | average, or slightly above the prime
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| or combination mortgages. Each of these
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| | rate. In this scenario, as interest rates
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| has its benefits and disadvantages along
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| | rise and fall, so do your mortgage
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| with different types of lending and
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| | payments.
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| interest setups within each major type.
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| | Bear in mind, though, that the key risk
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| To learn more about the pros and cons of
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| | with an adjustable rate mortgage is if
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| the different types of home mortgages,
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| | the general real estate market rate
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| keep reading.
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| | rises, one's monthly mortgage payment (on
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| Fixed Rate Mortgage
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| | the interest) will rise as well.
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| A fixed rate mortgage is your standard,
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| | If you're part of a family that expects
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| typical, mortgage. Its main advantage is
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| | its income to rise over the years, are
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| that your housing costs are predictable -
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| | only planning to own your home for a
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| you know how much you can expect to pay
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| | short period of time, anticipate stable
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| every month, when your mortgage will be
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| | mortgage interest rates in the
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| paid off and exactly how much it will
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| | foreseeable future, or simply want to get
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| cost you in interest payments.
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| | into the housing market but the interest
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| Typically, a fixed rate mortgage comes in
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| | rates are simply too high to lock in with
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| a 30-year term. However, homeowners who
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| | a fixed rate mortgage, than an adjustable
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| are refinancing their homes have
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| | rate mortgage is for you.
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| increasingly been tapping into shorter
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| | Combination Mortgages
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| 15-year terms, while first time home
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| | It is possible to obtain mortgages that
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| buyers sometimes consider terms as long
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| | change their type as they mature. For
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| as 40 years in order to pay less on their
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| | example, the Super Seven or Two-Step
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| monthly debt.
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| | mortgage gives homeowners a low,
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| Another popular type of fixed-rate
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| | predictable interest rate for the first
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| mortgage is the bi-weekly mortgage.
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| | seven or ten years of their mortgage. At
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| Because making your mortgage payments on
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| | that point, their interest is reevaluated
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| a bi-weekly basis allows you to make two
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| | based on current market conditions.
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| extra mortgage payments every year
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| | The benefit? A lower interest rate to
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| (therefore the equivalent of 13 monthly
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| | start, particularly if you plan to sell
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| payments instead of the normal 12) , you
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| | the home within 7 years. The drawback?
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| can pay down your mortgage faster and
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| | Depending on rates, your interest rate
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| save tens of thousands of dollars on
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| | could jump as high as 6 or 7 percent by
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| interest alone.
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| | the end of your term.
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| The major disadvantage of a fixed rate
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| | The type of mortgage you ultimately
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| mortgage is that if you get your loan
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| | select for the purchase of a home is a
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| when interest rates are high, you're
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| | weighty decision that must factor in a
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| locked in at that rate. So, if interest
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| | number of risks and personal
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| rates fall, you lose out on that
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| | circumstances. Before jumping into the
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| potential interest savings and would then
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| | excitement of new home - especially for
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| need to walk through the steps of
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| | first time buyers - you should talk over
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| refinancing the loan to get a lower rate.
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| | options with your spouse, other family
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| Adjustable Rate Mortgage
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| | members, and those who have some
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| Adjustable rate mortgages become very
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| | expertise in matters of finance and real
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| popular when interest rates are high.
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| | estate.
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| Typically, lenders offer a low,
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