Choosing the Right Home Loan

Home loans come in many shapes and sizes. Deciding which loan makes the most sense for your financial situation and goals means understanding the benefits of each. Each has different reasons you’d choose them.

Whether you are buying a home or refinancing, there are 3 basic types of home loans.

Fixed Rate Mortgages

Fixed rate mortgages usually have terms lasting 15 or 30 years. Throughout those years, the interest rate and monthly payments remain the same. You would select this type of loan when you:

Plan to live in home more than 7 years.
Like the stability of a fixed principal/interest payment.
Don’t want to run the risk of future monthly payment increases.
Think your income and spending will stay the same.

Adjustable Rate Mortgages

Adjustable Rate Mortgages (often called ARMs) typically last for 15 or 30 years, just like fixed rate mortgages. But during those years, the interest rate on the loan may go up or down. Monthly payments increase or decrease. You would select this type of loan when you:

Plan to stay in your home less than 5 years.
Don’t mind having your monthly payment periodically change (up or down).
Comfortable with the risk of possible payment increases in future.
Think your income will probably increase in the future

Combination Rate Mortgages

Combination rate mortgages combine fixed interest rates and adjustable interest rates. Lenders often refer to these loans as hybrid loans. For the first few years (3-7), the interest rate is fixed. It remains the same and so does your monthly payment. During the remaining years of the loan, your interest rate becomes adjustable and can vary. You would select this type of loan when you:

Want the stability of a fixed principal/interest payment in the short term.
Want to repair your credit by demonstrating your ability to make regular payments, then refinance for a lower interest rate.
Have a lot of consumer debt (these loans typically allow more).
Want to borrow more and get a lower monthly payment than a standard fixed rate loan.

By carefully considering the above factors and seeking our professional advice, you should be able to select the one loan that matches your present condition as well as your future financial goals.

To find the loan option that fits you best, contact us to get pre-approved. It only takes about 10 minutes, can be done over the phone, and all the information we will need to know you will probably know right off the top of your head.

Common reasons to refinance your home in Michigan

1. Lower your monthly mortgage payment.

2. Save money every month by refinancing from a higher interest rate to something lower. Or refinance from a shorter-term loan to one that may better fit your financial goal of maximizing your monthly usable income. Even when doing a rate and term refinance, it is possible to receive a small amount of money back at closing – typically 2% of your loan amount or $2,000 (whichever is lower).

3. Refinance your VA or FHA mortgage faster than ever. FHA and VA Streamline Refinances allow you to refinance an existing FHA or VA loan without the need for an appraisal or verification of your income, making your refinance faster than ever.

4. Change your mortgage from a risky Adjustable-Rate Mortgage to a secure Fixed Rate Mortgage.

5. Debt consolidation. Take cash out of your home for any reason. consolidate your debts by combining your first and second mortgages, investments, college tuition, vacations, etc.

6. Home improvements. Refinance to improve your home with an FHA 203K home improvement loan. Choose from the quick streamline option for changes less than $35,000 or the full version for more extensive renovations.