  Should
I choose a fixed or adjustable rate loan?
Fixed Rate Mortgages have a stated interest rate that
does not change over the life of the loan, which means your monthly
mortgage expense can be easily anticipated for the next 30 years
of however long you keep your loan. If you believe interest rates
are going to increase, this may be the best option for you.
Adjustable Rate Mortgages (ARM's) are linked to an index and change
as the index rate changes. Many mortgages, such as a 5-Year Fixed
ARM, start as a fixed rate loan and then convert to an adjustable
rate after a certain number of years. Adjustable rate loans have
more risk due to the possibility that the interest rate could increase.
However, because you are assuming some of the risk the lender will
generally reward you with a lower interest rate. These loans are
of particular benefit to borrowers that plan to either sell the property
or refinance before reaching the adjustable period. If you know you
will not be in a particular home for more than a few years, we recommend
you considering an adjustable rate mortgage.
|
 When
does it make sense to pay points?
Points are a one-time fee that a borrower pays to lower the interest
rate. Points are defined as a percentage of your loan amount, with
one point being equal to one percent of your loan. For example, if
you borrow $200,000, one point would be equal to $2,000. Paying one
point will generally reduce your interest rate by approximately .25%.
An alternative to paying points is to receive
a "credit" from the lender in exchange for a higher
interest rate. Whereas points are added to your closing costs,
a credit is used to reduce your closing costs. Once again,
you can receive a credit of approximately one point by raising
your interest rate .25%.
Whether you choose to pay points or receive
a credit, this amount will be applied to your closing costs
when your loan funds.
|
 Should I consider
an Interest Only Mortgage?
Interest Only Mortgages are a good means of either increasing your
home purchasing power or maximizing your flexibility to control cash
flow. You can save significant amounts of cash for investment, savings,
or other expenditures during the first ten years of your loan. If
you have a high amount of credit card or other consumer debt, it
may make sense to pay down the higher interest rate debt first and
then start working on your house. With these loans, the minimum payment
required covers interest only. You decide how much or how little
of the principal to repay each month.
|
 Am
I maximizing My Investment?
Suntree Mortgage believes that you should treat your mortgage as
an investment. For most people their home will be their biggest investment
for the future. A mortgage payment is a type of "forced saving" that
many people will count on for retirement. In addition, the tax savings
from writing off the interest will greatly reduce the yearly cost
of your mortgage payments.
A useful question to consider is the following. Would you invest
$200,000 in a 30 year fixed asset and never monitor the market again?
Then why do many people start their search for a loan by deciding
that a 30 year fixed rate is the best product for them? In fact,
most people overpay on their mortgage interest by staying with a
longer fixed period than is appropriate in their situation.
Why not consider a shorter fixed length and
focus more attention on your single largest asset, your home.
By devoting a small amount of time to managing your home
mortgage, the benefits can outweigh the time invested.
Mortgage
Calculator
|
| |
|
