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Why It's Important To Choose The Right Home Loan

By Tabitha Jean Naylor

It's very true that not all home loans are made for everyone. When purchasing a home in Massachusetts, a smart home owner would look at the advantages and disadvantages of various loans, only to make sure that they are choosing the loan that will suit their needs financially.

Terms Of Loans

Many people choose to work with a 30 year (360 months) loan. 15 year loans tend to be popular amongst those that want a shorter term and can withstand higher monthly payments. These loans are also very popular when mortgage rates reach a low point across the board.

It's important to think ahead when selecting a loan and choose a loan that is going to meet all of your goals financially. A short term loan is the best way to save yourself money on the interest that you pay in the long run, but the monthly payments are higher than a 30 year term

Loan Options

When researching the various mortgage products available in Massachusetts, there are some things that you will need to consider before you make your decision. First, you need to consider your monthly budget, and what type of mortgage payment you can fit in. Make sure that the amount you pay will allow you to live comfortably, not tight. You also need to think about how long you would like to be paying the loan off. If you would rather get the loan paid, and have the resources to do so, you might want to go with a 10 or 15 year loan. However, if you have no intent on moving again you could work with a 30 year loan, paying a little more each month to cut down on interest.

When you have considered all of the financial factors, you can then start to think about the types of loans that best fit your circumstances. Below are some of the more common mortgage products:

  • Fixed Rate Loans - These are the most traditional loans in Massachusetts, offering a set rate of interest over the entire life of the loan that you choose. When you have this type of loan, you can expect that your monthly payment will be the same each time you pay.
  • Adjustable Rate Loans - These types of loans will usually begin with a lower rate of interest, and based on the rates of the market, your payment will fluctuate between the months. Usually, the interest rate will change each year rather than monthly; however, they have been known to go either way.
  • Balloon Loans - If you know that you are going to be moving in a certain amount of time, and you are thinking of having a lower interest rate without choosing an adjustable rate loan, you might want to think about choosing a balloon loan. These types of loans will provide you with a lower rate; however, if you do not pay the loan off in the time that you are moving, you will need to find another loan that will pay off the first.
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12/23/2013

Alex Fleming

"It's very true that not all home loans are made for everyone" - I would agree with this, but no panic. You can check up your chances for a home loan by finding lenders at www.emortgagerates.com

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