Interest Capitalization Before Market Stabilization
Buying a home is easily one of the largest decisions in your life. After all, it’s the foundation on which all aspects of a future are built. In other words, choosing the right type of mortgage loan is imperative – chances are it’ll be the biggest loan you will ever take out. That’s why finding an interest rate that suits your family, financial situation and plans down the road is an issue that is not to be taken lightly.
There are several new mortgage plans currently available. However, these specialty loans are volatile in nature as the interest rate is subject to change depending on the state of the market and the lender’s discretion.
Thankfully, there are still traditional mortgage loans that adhere to a fixed monthly interest rate, providing stability in an unstable age.
Fixed-Rate Mortgages:
While you may think purchasing a home is risky in today’s market, it doesn’t have to be. Fixed-rate mortgages have lasting power for a reason. As the name implies, fixed-rate mortgages offer equal monthly repayments on your total loan balance -- the most popular plans being 15 to 30 years. The benefits of which include steadfast interest rates – no matter if they increase or decrease – and the ability to make a larger monthly payment, transferring the additional money towards principle. Mortgage loans can be paid off in half the allotted time, should you choose to pay more than what is required monthly.
Interest-Only Mortgages:
Another option to consider is an interest-only mortgage. Rather than paying interest and principal simultaneously, interest-only mortgages requires you pay only interest for a period of 5-10 years. Generally, interest-only plans are comprised of 30 to 40 year loans with principal being paid after 60-120 months. An interest-only mortgage doesn’t require homeowners to pay only-interest; it simply offers first time homebuyers the option to opt out of principle payment during the early, formative years of settling down.
FHA Loan:
Lastly, consider taking out a Federal Housing Administration (FHA) loan. The initial down payments are as little as 3% and generally approve individuals with a less-than-perfect credit history. They offer several mortgage loans, including 15 to 30 year fixed-rate plans.
More so than ever, first time homebuyers have an opportunity to capitalize on the market’s weakened state. Presently, mortgage loans are at unprecedented all-time lows, with the average 30-year fixed-rate interest being 4.69% and 15-year loans at an incredible 4.17%.
Now is the time to reevaluate your current living situation. If you are a first or second time homebuyer looking for your humble abode, give me a call at 651-216-9466. My mission is to land you the home you never thought possible. Sure the state of our economy may be terrible, but who says it can’t be terrible in your favor.
Welcoming you home,
Travis Senenfelder
BSL Real Estate
440 2nd St.
Excelsior, MN 55331
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