Loan Options Archives - Page 4 of 6

Why Should You Consider Getting An Adjustable Rate Mortgage? If you are planning on buying a house in the near future, you have probably seen that there are multiple options available. You might even be considering an adjustable-rate mortgage, usually shortened to ARM. While many people opt for a fixed-rate mortgage, there are a few reasons to consider an ARM as well. What are some of the top advantages to keep in mind?

A Lower Initial Payment

One of the biggest reasons why many home buyers consider an adjustable-rate mortgage is that you get a lower initial payment. Often, the ARM’s interest rate is lower than the fixed-rate interest rate at the time of signing. This means that you might have more flexibility at the beginning of the amortization schedule, freeing up more cash. You can use that cash to handle renovations and repairs if your house requires them.

You Can Pay Down Your Principle Faster

Because the interest rate is lower at the beginning of the payment cycle, you might be able to use that extra cash to pay down the principle faster. This could allow you to pay off the house earlier, or it might mean that you end up paying less interest over the life of the loan because you can shrink the principle faster.

You Can Always Refinance Later

While many home buyers are concerned that an adjustable-rate mortgage might increase after the fixed period ends, you do not necessarily have to stick with the ARM forever. For example, you might decide that you want to refinance the house down the road to a lower interest rate, creating opportunities to save money. You might even end up selling the house and moving before the fixed period ends, giving you an opportunity to reset your loan.

Consider Getting an Adjustable-Rate Mortgage

These are a few of the top reasons why you might want to consider an adjustable-rate mortgage. Like anything else, ARMs have their benefits and drawbacks, and the right option for one person might not be the right option for you. You should think carefully about your specific situation, consider all of the options available, and select the best choice for your needs. Do not hesitate to reach out to an expert who can help you.

What You Need To Know About A Closed-End Second Mortgage

A home is probably one of the most expensive purchases you will ever make. It is important for you to understand all of the options available to you, particularly if you need a quick source of cash, and you might be thinking about taking out a second mortgage. You can use a closed-end second mortgage to cover the cost of repairs, medical debt, and even consolidate your other sources of debt. How do you know if this option is right for you?

An Overview Of A Closed-End Second Mortgage

If you decide to take out a second mortgage, you will typically withdraw the cash you need. Then, if you need more cash in the future, you can take out more down the road. In contrast, with a closed-end second mortgage, you will receive the entire loan amount upfront. Then, you will not be able to withdraw any additional cash if you need more because you have already withdrawn the maximum limit. Generally, you can withdraw up to 80 percent of your home’s equity value, but there are many factors that will dictate your limit.

The Pros

Before deciding whether this is the right option for you, you must weigh the benefits and drawbacks. The biggest benefit is that it gives you access to a quick, large, lump sum payment. You can use this to cover home renovations and pay off debt. You also get access to a fixed interest rate. Unlike other options, you don’t have to worry about the interest rate changing.

The Cons

On the other hand, there are some drawbacks you might notice. You have to use your home as collateral, so you risk losing your home if you can’t meet the payments. In addition, you will probably incur higher closing expenses, and you may have to pay a higher interest rate. This is particularly true if you are taking out a large amount of money.

Weigh Your Options Carefully Before Deciding On A Second Mortgage

If you are looking for a second mortgage, you need to think about all of your options carefully before you decide which one is right for your needs. Consider reaching out to an expert who can help you.

Why Should You Consider Getting An Adjustable Rate Mortgage?

What You Need To Know About A Closed-End Second Mortgage

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