What Mortgage Is Right for Me?
Finding the right mortgage can be one of the most daunting aspects of purchasing one of the new homes in Otsego MN. How much will you qualify for? Are you sure you can afford the monthly payments? How long a mortgage should you choose? These are just a few of the many questions that can keep potential homebuyers up at night. While there are hundreds of mortgages from which to choose, these are some of the options to consider.
If you plan on staying in your home for an extended period, a longer 30-year loan may be the option you want. Your monthly payments will be lower, but you will pay more in interest over the years. An alternative is a 15-year loan, which will raise your monthly payments, but you will pay less interest in the long run. Of course, you can always choose a 30-year loan and make payments on the principal, as well as your monthly payments. This will ultimately reduce the amount of interest you pay and can help you pay off your mortgage sooner, but also gives you the security to only pay the lower monthly rate during tighter financial times.
An Adjustable Rate Mortgage (ARM) is an option if you want to take advantage of a low interest rate or keep some cash. It’s also an option if you are sure you won’t be in your home for more than five years. The rate is fixed for the first few years, but then fluctuates depending on the market at the time. This can be risky if rates rise considerably.
Interest-only mortgages are set up so that you only pay the interest on the loan for the first three, five, or ten years, depending on the loan. After that initial period, you then begin paying the principal as well. Although you can lower your monthly payments by up to 25 percent during the initial period, buyers will have to be prepared for a significant jump in payment once they begin paying the principal. However, this is an option if you want to have more cash available in the early years of the loan.
These are just a few of the types of mortgage loan options available. When you are ready to purchase one of the new homes in Otsego MN, you should ask your sales consultant at Key Land Homes for a list of preferred vendors. Working with a builder’s preferred lender can mean a smoother process and a better loan program.