If you plan to live in your home less than 10 years, you can then consider this type of mortgage. You can even customize your rate and payments by selecting the fixed rate mortgage that match how long you plan to live in your home.

 

You can choose a mortgage depending on the amount of time you are going to you remain in your home.

You potentially pay a lower interest rate with the initial fixed rate loan then you would get with the traditional 30 year fixed rate mortgage.

You can benefit from rates on this type of mortgage based on the London Interbank Offered Rates Index, which is typically lower than the average fixed rate.

Large loan amounts are usually available.

Secure your interest rate with this locked in rate.

Simultaneously, you can establish a home equity line of credit.

You can take advantage of available payment options. You can make interest only or fully amortized payments during the initial loan. Then after the initial interest only period, your monthly payments will increase because it was based on a fully amortized repayment schedule of principal and interest.

You can prepay principal at any time without a penalty. If the principal payments are made during the interest only, your payments will then be recalculated monthly based on this new lower principal balance. There is usually no fee for the service.

The lifetime cap is based on the loan amount and the initial fixed rate term that you selected.

Copyright 2005 Fern Kuhn, RN
Specializing in Diabetes

You may reprint this article as long as you keep the links active

 



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