April 17, 2009, Newsletter Issue #163: Mortgages – 3 Important Factors

Tip of the Week

Understanding mortgages is not as difficult as many people believe. When you talk about the ‘bottom line', there are really only a few factors that go into most people choice of mortgages; Rate, Term, & Cost. Here is some info on each of these factors. Rate – The rates of mortgages can be fixed or adjustable. The rate is termed as a percentage and, obviously, the lower the percentage, the better the rate. Rate is often determined by credit worthiness, income, or home value. Look out for adjustable rate mortgages and be sure to understand the adjustments clearly. With rates as low as they are today, most people are choosing fixed mortgages for their homes. Term – How long will you be paying off your mortgage? This is the ‘Term'. Most mortgages today are offered over terms of 10, 15, 20, or 30 years. The longer your term, the lower your monthly payment will be. Rates will often go lower with a shorter term mortgage, so decide what matters most to you and then decide on the best term mortgage. Cost – There are closing costs on almost all mortgages. These costs can vary greatly depending on the lending institution and title company. Get a clear picture of your closing costs and what each means. There are choices to be made regarding taxes, escrows, and insurance, premiums, so be sure to compare apples to apples when looking at different mortgages and options.

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