Around the same time you decide to purchase a Fort Lauderdale luxury home, is when you should consider how you will pay for your new home. If you’re paying cash, then you don’t have to think much more. On the other hand, if you’re thinking of getting a home mortgage loan, you’re in luck, there are many great options from which to choose!
Of course, the best mortgage for you new luxury home will depend on your financial situation. Knowing the various mortgage loan types will help you make an informed decision. We’ve put together a list of the three most popular mortgage loan types and what you need to know about each one.
Fixed-Rate Mortgages: Home Financing At A Guaranteed Rate
A fixed-rate mortgage is exactly what it sounds like; a mortgage with a set interest rate. With a fixed-rate mortgage, your interest rate is the same for the life of the home mortgage loan and cannot be changed.
Fixed-rate mortgages are typically a good financing option when interest rates are low. By purchasing a fixed-rate mortgage at a low interest rate, buyers lock in low payments and are protected from sudden rate increases. Historically, fixed-rate mortgages have been a bit more difficult to qualify for when interest rates are high.
Variable-Rate Mortgages: Lower Rates And Larger Loans
A variable-rate mortgage is a home loan with an interest rate that changes over the length of the loan. Generally, the interest rate remains the same for a pre-determined period of time — usually towards the beginning of the loan. After that period, the mortgage rate rises and falls in line with the prime lending rate.
One of the primary factors that makes this type of loan attractive to home buyers is its lower initial rates and mortgage payments allow buyers to qualify for larger homes. Buyers can also take advantage of falling interest rates without having to refinance. However, variable-rate mortgages can become expensive in a short period of time if interest rates rise sharply. While some variable-rate mortgages put caps on the maximum annual increase, these caps don’t usually apply to the first rate change.
Interest-Only Jumbo Mortgages: Flexible Terms For Wealthy Buyers
Interest-only jumbo mortgages are a specialty product. These mortgages are designed for wealthy buyers purchasing luxury homes and needing to mortgage over $417,000. A primary advantage of this kind of mortgage is that borrowers can make interest-only payments for the first 10 years of the loan. Typically to qualify for this type of mortgage, borrowers must have large cash reserves and make a hefty down payment.
With all of these home mortgage loan types, it’s important to consult a terrific mortgage advisor. Let us know if you need a referral. We regularly work with home buyers with mortgages, so we know which advisors are top notch!
Remember, you can see Today’s Mortgage Rates on the Luxury Living Fort Lauderdale website!