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First Home Mortgage Loan? Eh! Understanding Fixed versus Adjustable Rates



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By : Desiree Britton    99 or more times read
Your first home mortgage loan. anybody who has ever purchased a home with a mortgage understands that by the time the pay off is made on the mortgage more money is shelled out to cover interest costs than the original purchase price of the house.

As an example, on your first home mortgage loan, you borrow $295,000 at 6% with a 30-year term. After your first home mortgage loan period is done, youíll have paid over $336,701 in interest on the $295,000 principal amount you borrowed. A result, your house that is only for $295,000 ends up costing you $631,701 on your first home mortgage loan.

Therefore, it makes absolute sense that prior to taking on your first home mortgage loan, a slight bit of looking is completed. Getting the best product for your first home mortgage loan is nice but most probably the biggest financial decision youíll ever have to make, so some due diligent is good advice.

All right. So letís get down to the essentials. Most people assume that a mortgage is a loan. Well, itís not. A loan is something the bank gives you. A mortgage, on the other hand, is something you give to the lender. I hope you got that.

Now when you receive your first home mortgage loan, itís crucial that you be knowledgeable about what types of mortgage products are currently offered in the market. Below are some of these first home mortgage loans.

Fixed Rate For Your First Home Mortgage Loan

If youíre thinking of getting your first home mortgage loan, a fixed rate mortgage is perhaps the perfect choice for you. In a fixed rate mortgage, interest rates are set all throughout the total loan term. This means that when you get on your first home mortgage loan, your interest rate will not increase or decrease. The interest rate of your first home mortgage loan will remain the same all through the loan period, usually 30, 20, 15, or even 10 years.

Getting a fixed rate first home mortgage loan will have you paying for a predetermined monthly payment rate. Payments for your home mortgage loan interest and principal will never change. Having this type of mortgage for your first home mortgage loan is particularly beneficial if over time, interest rates suddenly go up. In addition, down payment if you get this as your first home mortgage loan could be as low as 5% of the actual buying price.

Adjustable Rate First Home Mortgage Loan

If the projected interest rates in the market are going down, then a variable rate mortgage might just be the right option for getting your first home mortgage loan. Adjustable rate mortgages are mortgages where the interest rates and monthly payments depend on the rise and fall of interest rates in the market. This type of mortgage is especially a good option for a first home mortgage loan also if you expect a rise in your take-home pay over the next few years.

Balloon First Home Mortgage Loan

If you plan on keeping only for a short term, then getting a balloon first home mortgage loan will do the trick for you. A balloon first home mortgage loan offers lower interest rates compared to a regular loan. However, the only downside to this type of mortgage for a first home mortgage loan is that a huge lump sum is due in a span of 5 to 7 years...not too many people have the resources to pull this off. If you do not have resources to cover that sum and you are still in the house by the end of the loan term, don't worry, you might need to take on another loan in order to cover the cost for that first home mortgage loan.
As a Mortgage Specialist in Calgary, Alberta, Sybil Hope has helped many clients solved their unique home mortgage challenges. Now she shares her experience and knowledge on home mortgages so if you are looking for a home mortgage in Calgary, Alberta, come by and visit us soon.

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