Choosing the best mortgage now

Mortgage rates have been on the rise for the past month, but they're still at fairly low levels historically speaking.

If you're in the market for a new home, you figure it must be less expensive to buy now than when rates go up even further, assuming housing prices stay strong in the near term, something economists expect will happen. That may be the only thing you can be sure about.

But finding the best type of mortgage for your situation can feel a little like finding the perfect ecru in a sea of beige.

It doesn't have to be that way. If you ask yourself the right questions, you at least can narrow your search to the best category of mortgage for which you need to comparison shop.

15-year versus 30-year debate

The first question you should ask is, "How much can I afford to pay on a monthly basis?"

Keep in mind, your mortgage payment is only part of what you'll pay to live in your home. You also should budget for furniture, your house's upkeep and the general expenses of life (like, say, food).

A 30-year mortgage will have a lower monthly payment and a higher interest rate than a 15-year mortgage. So you'll have a smaller monthly obligation but you'll pay more for your house over time because you're paying it off with interest for a longer period.

Conversely, a 15-year mortgage will have a higher monthly payment and a lower interest rate so you'll pay less for your house because you're paying it off in a shorter period.

"For most home buyers, especially first-time buyers, taking a 15-year (or 20-year) mortgage is out of the question," said Keith Gumbinger, vice president for mortgage tracker HSH Associates. The higher monthly payments are often too much to handle for these types of buyers.

But for home buyers with sufficient income and a desire to be mortgage-free in a short time, a 15-year loan might be a good bet.

Fixed versus adjustable-rate conundrum


The second question you should ask is, "How long will you be in the house?" You probably can't answer with absolute certainty, but you can play the odds.

Say, for example, you're single and buying a small condo but you can easily envision yourself married; or you've just started a family and plan to expand it at some point. Chances are good you'll want to trade up to a new home in five to seven years. On the other hand, maybe you've had your family and want to settle into a place with a good school system, which your kids will be using for the next 12 years.

Whatever the answer, it will help you decide whether it makes sense to get a fixed-rate or an adjustable-rate mortgage (ARM).

A fixed-rate mortgage locks in a rate for the length of your loan.

ARMs, meanwhile, are short-term fixed-rate loans: After the fixed rate term is up, the rate adjusts at regular intervals in accordance with current interest rate conditions at that time. A 5/1 ARM, for example, has a fixed rate for five years and then adjusts every year for the next 25 years. (ARMs typically run on a 30-year schedule.)

The length of the fixed-rate term on an ARM typically can range anywhere from one month to 10 years. The longer the rate is fixed, the higher the interest rate you'll get. But generally speaking -- and there have been exceptions in the past -- ARMs will cost you less in the short-term. With the ARM, both your monthly payments and interest rates should be lower than either a fixed rate 15-year or 30-year mortgage.

The risk with an ARM is that when interest rates rise, you could end up paying much more than you bargained for. "You're subject to the vagaries of the market," Gumbinger said. That's why in today's low-rate environment, he noted, "You want to maximize the fixed-rate picture to match your time frame."

If you know you'll be in a home for 12 years or more, a 30-year fixed rate mortgage might work better for you than, say, a 5/1 ARM, where you fix a rate for five years and then it adjusts every year after that. But if you think you won't be in the home longer than five or six years, a 5/1 ARM might make more sense.

Article continued at

Jackson Hole Real Estate Guide | HomeReview of Wyoming Featuring the resort and lifestyle Jackson Hole real estate and Wyoming Ranch real estate properties.


Lampe Berger at Wood-N-Treasures - Lampe Berger fragrance lamp and Lampe Berger home fragrance oil.

Levitra - Online guide for Levitra information, news, discussion and online ordering.

Life Insurance In-Depth An in-depth look at term life insurance and whole life insurance, with policy comparisons, general advice, and instant online quotes. The Easy Way to Find Link Swap Partners. Automate the management of reciprocal links pages on your web site with - add, edit, modify, import, email notifications, link checkers, and much more!


Loan Quote is produced by as an online mortgage quote service. Our goal is to provide you with the best information possible to help you meet your mortgage needs.


Log Home Plans via the Internet Over 100 log home plans from leading North American dealers and manufacturers.

Log Homes via the Internet Log homes by B&H Cedar Log Homes. Custom log home plans, kits and floor plans. Free newsletter. Free web sites for independent log home builders.

Loan Central Independent UK broker offers secured and unsecured loans for any purpose. Specialises in helping the self employed and those with a bad credit history

Lotus Sculpture - Offering the best quality in South Indian Bronze sculptures , Soft Marble statues, and Granite sculptures of Hindu gods including Bronze Natarajas, Large Granite Buddha statues and Ganesha statues.


About Us | Home | Apply Now | Refinance | 2nd Mortgage | Debt Consolidation | Contact Us | More Resources | Refinance - Mortgage Refinance
Great Articles
Home Equity Lines | 8 Must-Ask Questions | 6 Ways to Slash Costs | Be Cautious With Debt | Refinancing
Choosing Your Mortgage | How to Save | How's Your Cash Flow? | How Much Can You Afford? | Cleaning Credit
When to Refinance | Save for Downpayment | Rebuilding Credit | Top 10 Tips| 6 Keys for Buying
Copyright 2002, Mortgage Refinance Loans & Lowest Mortgage Refinancing Rates. All Rights Reserved. Equal Housing Opportunity. Disclaimers