Jun
25

Selecting the Best Mortgage Option for You

June 25, 2014

iStock_000013864457SmallAre you searching for a new home in Chicago? If you are, then you’ve probably also started researching available mortgage options. Selecting the best mortgage for you can be one of the most stressful decisions you make when purchasing a new home, because it can affect your finances for the next 15 to 30 years of your life.

Most mortgage products fall within one of two categories – fixed rate or adjustable rate (ARMs) – but there are many different options in these categories. So, how do you know which option to select? As listed in the article “

How to Choose the Right Mortgage for You” on the Equifax Finance Blog, the Consumer Financial Protection Bureau (CFPB) recommends keeping these things in mind:

  • Interest rate
  • Size of the loan
  • Type of interest rate and whether or not it can change
  • Closing costs, including lender’s fees
  • How long you have to repay the loan
  • Annual percentage rate (APR)
  • Whether the loan has any risky features or penalties

The most common type of mortgage is a 30-year fixed rate mortgage, which provides the borrower with a fixed interest rate and monthly payments over the life of the loan. If you’re looking for an extremely predictable loan with lower payments, and you plan to stay in your home long-term, then this is most likely a good option for you.

Also available are 15-year fixed rate mortgages, which are very similar to 30-year fixed rate products. However, because of the shorter term, the monthly payment with this loan can be considerably higher.

Buyers can also choose from adjustable-rate mortgages, which generally offer lower interest rates and payments up front. However, as the market conditions change, so will your interest rate and monthly payment.

No matter which type of mortgage you are considering, be sure to talk to your mortgage lender to discuss all of your available options. For information on mortgages, personal finance, credit and more, be sure to visit the Equifax Finance Blog.

 

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Courtney Rogers

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