Modern Living

Modern Living

Home and real estate topics discussed in detail

Moving Into a Brand New Home

September 26, 2014 | 2 Comments

After attending an open house and approving a home inspection, you’re nearly ready to move into that brand new home. However, the process of mortgaging a home takes time and consideration of different loan programs. A mortgage is a huge financial commitment over several decades. Picking the right mortgage at closing gives you peace-of-mind for the rest of the loan’s term.

Long-Term Security

Turn to a fixed mortgage when you want to stay in the home longer than five to 10 years. Fixed loans offer a steady interest rate for the life of the loan. You’ll never see an adjustment during the payment period. When you have a steady job, this fixed rate fits perfectly into your budget. However, your interest rate is often higher compared to other loan types. You can justify the interest rates by taking them off on your income tax return. A tax refund could be in your future with considerable interest paid throughout the year.

Short-Term Savings

A home purchased for only a short period, including less than five years, works well with a variable-rate mortgage. You will see interest adjustments each month, but the starting rate is usually at a much lower amount. Some borrowers head for trouble by picking this loan without a short-term plan in mind. If you stay in the home for more than a decade, the adjustments could be so large that the payment is too high to budget. Selling the home before the mortgage adjusts upward is the best plan to secure your finances.

Special Circumstances

Always ask your mortgage professional about special programs. The federal government offers specialized loans to low-income, veterans and underwater homeowners. Your lender should be able to go over your particular situation to narrow down the loan selection process. There is a loan for almost every applicant with a steady income history.

Look at your personal goals to match them to the right mortgage. Not every homeowner is planning on staying at a property for generations to come. Your unique lifestyle dictates the loan type, allowing everyone to have a strong chance at a good loan deal.

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