Your financial
goals can help you determine what type of mortgage is the right
choice for you. Here are some things to consider when deciding which
mortgage to choose:
Consider your tolerance to financial risk. If you have a low tolerance
for financial risk, it would be best to stick to traditional mortgages
with fixed interest rates. If you have the stomach for moderate financial
risk you could save yourself some money with Adjustable Rate Mortgages
including interest only or option
loans.
Consider the length of time you plan on living in your home. If you
plan on staying in your home for:
One to Three Years: Consider using an Adjustable Rate Mortgage
with a term length of 1-3 years.
Four to Six Years: Consider using a seven year Balloon Mortgage or an
Adjustable Rate Mortgage with a term length of five to seven years.
Seven to Ten Years: Consider an Adjustable Rate or Fixed Rate Mortgage
with a term length of fifteen or thirty years.
Consider home equity.
To build equity in your home
quickly, choose a mortgage with a shorter term length such as fifteen
or twenty years. If your budget requires the lowest payment possible,
choose a mortgage with the longest term length such as thirty or forty
years with an adjustable interest rate.