| Thirty-year
fixed rate loans are what most people think of when
they hear the word "mortgage". Fixed rate
loans are also referred to as "fully-amortized"
loans. One of the aspects that buyers like about fixed
rate loans is that the payments stay the same for the
life of the loan. Generally, these loans are offered
in a 15- or 30-year duration.
A 30-year loan will provide larger tax deductions, as
you will be paying more interest than principal during
the first 23 years of the loan. A 15-year loan, on the
other hand, is paid off twice as quickly and usually
has a lower interest rate. You build more equity because
your payments pay more principal. As mentioned earlier,
you (or the seller) also can "buy down" your
loan by paying more tax-deductible points up front,
to lower your fixed interest rate.
Balloon Loan: A fixed loan that is
amortized over a 30-year period but becomes due and
payable at the end of a shorter term (i.e., 5, 6, 7
or 10 years). Some of these loans have an option to
be extended with a new rate or rolled into another type
of loan. Usually, the rates of these loans are lower
than a regular 30-year fixed rate loan, but they are
not recommended if you plan to stay in the home for
a longer period of time.
Graduated Payment Mortgage (GPM):
A fixed-rate loan that has payments starting
lower than the payments on a standard fixed rate loan,
which increasing by a predetermined amount each year
for a specific number of years, usually five years.
Contact
us for more info on fixed rate mortgages in Saratoga
California |
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