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4 home loans you may want to consider

ByAndrew Bell

One thing is for sure: You know you want to buy a house in order to take advantage of all the joys and experiences that come with homeownership. What you may not know just yet is the type of home loan that can pay for what will likely be the largest purchase of your life.

Much like the housing market itself, you have lots of mortgage options to choose from. Here, we’ll briefly describe some of the most popular home loans so you can better map out how you plan to make homeownership a reality and put pen to paper on a mortgage application:

1. Fixed-rate loan
If you like predictability, this loan is right up your alley. As its title more or less implies, a fixed-rate loan enables you to take advantage of low-interest financing by locking in an interest rate so that it never changes for as long as you’re paying off the mortgage. They’re great because you never have to guess how much you can expect to spend with each passing month.

2. Variable-rate loan
This one also more or less speaks for itself, as instead of a rate that remains the same, the interest level with a variable-rate loan can go up and down depending on economic and real estate market fluctuations. This means you may wind up spending less in interest later on than you do initially. However, the opposite may also be the case. What’s key is ensuring you have the means to pay should rates rise.

3. Split interest rate
If it’s difficult for you to decide between one or the other, how about the best of both worlds? That’s what a split interest rate loan can provide. Depending on the ratio you choose – such as 65:45 – a portion of what you spend in interest on the loan will be fixed (65% of a $450,000 house, for example), while the remaining part is paid out on a variable rate basis.

4. Introductory loan
Perhaps this is your first interaction with the home buying process and you’re not making quite as much as you’d like in earnings. An introductory loan can be a great way to start out slowly, because the interest that you pay on the loan at the outset is typically more affordable. Over time – usually after a year or so – the rate rises; in so doing, so does your mortgage bill. However, there’s usually a ceiling on the degree to which interest increases.

We know the real estate business backwards and forwards. If you’re buying or selling, we know we can help. Talk to us at Ray White about any questions you have and we’ll do our best to help.

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