Yes, there are many different types of mortgages! There is the 30 year and the 15 year fixed rate, the adjustable mortgage (ARM), the adjustable with various timed adjustments, the adjustable that can be converted to a fixed, the interest only, the 125% mortgage, … and the list goes on. Confused yet? Good, if you’re at all sane, you ought to be!

Anyway, how do you go about deciding which of those mortgages would be the best for your situation? Well, as a close friend of mine always says:” It depends … ”. I just love those two little words! 

So, let’s start out by asking a few questions?
 How long do you plan on staying in the house?
 What is the sale price of the house?
 How much of a down payment will you make?
 What are the current interest rates?
 What is your credit rating?
 What fees are associated with the mortgage?
 What is the time frame for loan repayment?
 What amount of loan payment is in your budget (you do have  a budget, don’t you)?

Enough questions for now. In subsequent entries I’ll talk about the various considerations that most likely enter into your mortgage decision.
For now let’s start with: How long do you plan to stay in the house? I know what you are thinking (“I don’t know, I haven’t even bought the place yet!”)! It’s tough to answer that question, so give it your best guess.

Why is time frame important? If you plan on staying in your new home for a shorter period of time (let’s say3 to 5 years), it’s probably more important to you to have smaller monthly payments rather then to get the lowest possible interest rate.

Typically when staying in a house for a shorter period of time many go with an adjustable mortgage. At the same token, when planning on keeping the house (and the loan) for a long time, most opt to go with a fixed mortgage. After all, you know what you are getting into and won’t have any surprise payment increases when you least expect them.

©2006 Houses and Such. All rights reserved.