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How Do I Decide Which Kind Of Mortgage Loan to Apply For?

How Do I Decide Which Kind Of Mortgage Loan to Apply For?

Before tackling a mortgage application, homeowners should be sure their mortgage loan is a good fit.

Loan application form

Mortgage applications are stressful no matter which way you slice it. Hopeful homeowners are in the process of assembling paperwork and buffing up their credit score until it shines. By the time they get to the application phase, many homeowners are ready to be chewed up and spat out by lending analysts. They might forget they have the responsibility to shop around for their mortgage loan.

Before you put your financial application on the chopping block, try to assess the numbers yourself. There are two basic types of mortgage loans available. Doing some preliminary research on which one would work best for you will help you make an informed decision when the time comes.

1. Fixed Rate Mortgage.

A fixed-rate home loan has long-term structure, with the most common being the 30-year plan. This plan has the lowest payments over the longest period of time. The interest rate doesn’t fluctuate throughout the life of the loan and gets paid off in monthly installments.

2. Adjustable Rate Mortgage.

This loan structure has an interest rate that changes over time. After an initial agreed-upon period of low fixed interest, the rate will adjust on a year-to-year basis. This is generally a much higher interest rate based on the amortized loan.

Both these loan structures have their own pros and cons, and there are also a few other hybrid mortgage structures available for borrowers with atypical financial situations. If you aren’t sure which one is right for your situation, contact the experts at Midland Mortgage. Click here to get more information about getting the mortgage application process started.

Posted Aug 19, 2015 by Midland Mortgage Corporation