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Choosing a fixed rate mortgage, arm and or a construction loan.

May 6, 2008
It is quite normal for potential home buyers to look into 30 year or 15 year fixed mortgage rates when considering their monthly repayments. Many of us are buying homes later in life these days so it is not unreasonable to have the house paid off early. It may take some time to reach a decision as there are many things to contemplate. Home buyers looking into this need to be assured their monthly payments will not increase.

Steer clear of lenders that are offering unbelievable deals because they probably are. A fixed rate mortgage maintains a set interest rate during the period of the loan. For those individuals that don't like hidden surprises, this is always a benefit. Both my wife and I decided to research fixed rate mortgages when we started looking at homes for sale.

Even though it was important for us to pay off our loan at the earliest possible opportunity, we didn't want high, unrealistic monthly payments which we would have trouble maintaining. It became obvious that we had to look at fixed rate mortgages over a longer period and not just 15 year plans. The 15 year fixed mortgage rate was the plan we really wanted because neither of us wanted to be still paying a mortgage when we close to retiring. There was a lot of pressure to have the house paid off as soon as possible.

After taking everything into consideration we decided on a 30 year loan instead. There are always a number of points to think about when a decision like this has to be made. The main reason was that I found out my wife was pregnant. Because she wanted to be at home for our child, her income would not only be uncertain but also irregular. Unfortunately, a higher monthly payment was the downside for loans with a 15 year fixed mortgage rate. We just decided we would probably get into trouble if we took this route. The 30 year loan repayments were considerably lower than the 15 year figures.

Making a few additional lump sum payments during the year helps bring down the amount owed. If you make a handful of extra payments throughout a twelve month period you can knock years off of your loan. In the long term, this is a strategy well worth pursuing if you are able. We would have much preferred to have taken out a loan with a 15 year fixed mortgage rate but we had to consider our other commitments as well. All things considered, it all worked out for the best in the end. Construction loans offer the same options when searching for a loan. The construction loans options include fixed and arm construction to perm loans.
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