American Mortgage Resource, Inc.

Providing the Best Financial Resources for Boston and Massachusetts

Tag: Fixed Rate

How Do Fixed-Rate and Adjustable-Rate Mortgages Work?

When talking to a lender, there are two basic type of mortgages they will offer you. These are called fixed-rate and adjustable-rate mortgages. For most homeowners, fixed-rate loans are preferable if they plan to live in the home for an extended time. However, adjustable-rate mortgages are also offered for those who want lower interest rates with a shorter loan term. Keep reading to learn more about these two mortgage loans and see which one is right for you.

Fixed-Rate Mortgage

As this loan implies, the rate for the mortgage is fixed, meaning that it does not change for the life of the loan. Likewise, the monthly payment remains the same too. Repayment of a loan can range from 30 years to shorter lengths of 10-20 years. If you do choose a short loan term, understand that you will have larger monthly payments, but lower total interest costs over time. On the hand, a longer loan term with lower monthly payments is a more desirable option for committed buyers.

Adjustable-Rate Mortgage

If you plan to live in your home for a few years, then an adjustable-rate mortgage, or ARM, may be more suitable for you. Since the monthly payment is not set, it will change over the life of the loan. Rates for the loan will also fluctuate, although there is usually a limit on how much it will go up or down. “Lenders often offer lower interest rates for the first few years of an ARM, sometimes called a teaser rate, but rates can change after that– as often as once a year. The initial interest rate on an ARM tends to be significantly lower than that on a fixed-rate mortgage.”

Conclusion

Before making a big decision on a mortgage loan, make sure you are informed first. At American Mortgage Resource Inc., we offer the lowest competitive mortgage rates in Waltham, MA and surrounding areas. Let us help you choose the right home loan by contacting us at (617) 972-8588. You can also find more information on our website visitamr.com. Call today!

3 General Refinance Loans

Are you planning to refinance your mortgage? Do you want to take advantage of lower interest rates or perhaps lower your monthly payments? When you start to shop around for the best offers, it’s important to understand which loans you can get approved for. There are some refinance loans that may be better suited for your financial needs. Follow along in our blog to learn more about the general refinance loans you can apply for.

Rate-and-Term Refinance Loan

If you’re looking to save money on monthly payments or switch your loan from an adjustable rate to a fixed rate, then this loan can help with that financial goal. It can change the interest rate, loan term, or even both, without changing the actual amount of the loan. Experian comments that “if your original mortgage has an adjustable rate, moving to a loan with a fixed rate can help you avoid market fluctuations.”

Cash-Out Refinance Loan

Need quick cash for a home improvement project? Then a cash-out refinance loan may be right for you. When you apply for this type of loan, you are essentially taking out a portion of your home’s equity in order to get a large amount of cash. However, be cautious that this will most likely increase your loan amount, as well as result in higher monthly payments.

Cash-In Refinance Loan

While not as common as other loan alternatives, cash-in refinance loans are still an option for homeowners. Instead of taking out cash, you’re putting money into the loan to reduce the new mortgage balance. Consider this loan if you’re interested in qualifying for a lower interest rates, underwater on your mortgage or want to get rid of private mortgage insurance

Conclusion

Have any questions about the loan process? Get in contact with a representative from American Mortgage Resource, Inc. We can help guide you to make the right financial decision. Call or visit our website for more information. We look forward to speaking with you soon!

The Most Popular Mortgages and Their Benefits

Buying a home is both one of the most exciting events in a person’s life and one of the most stressful. Ensuring you find the right house while also deciding on the proper mortgage that will set you up for a successful future can be an extremely difficult task, but with the right help it is more than possible. Below we have listed the four most popular mortgages when it comes to real estate, so read on if you’d like to find out which of them is best for you!

Fixed Rate Mortgages:

Easily the most popular of any home mortgage, a fixed rate mortgage basically means that a set interest rate is applied to your loan, which provides a very stable and consistent monthly payment. The length of these fixed mortgages can range from anything as long as 30 years to a much shorter 15 years, which obviously just means you will be paying it off in smaller increments over a longer period of time or vice versa. While close to 90 percent of home owners opt to go with the 30 year mortgage to start, due to the lower monthly payments, the interest you pay on a short 15 or 20 year mortgage can make for a much more reasonable loan, because it is much lower considering how low the liability is for the bank.

Adjustable Rate Mortgages:

While this is a less popular option than a fixed rate mortgage in the United States, many different parts of the world like Britain and Australia frequently take advantage of an adjustable rate mortgage (ARM). The reason it would be wise to consider an ARM is because you are able to take advantage of lower interest rates in a given year without refinancing your home. On the flipside, there is always the chance that the rates will go up, causing your payments to increase with it, but there are many benefits to keeping your mortgage open to a yearly reassessment of its interest.

Balloon Mortgages:

This is a much different and specific type of mortgage, which is best used only if you have a strong guarantee that you will have the money necessary for the loan in the foreseeable future. Balloon mortgages are often shorter in length, around 10 years and have much lower payments throughout a majority of the mortgage term. Your payments are often just the interest for a large portion of the term, however, the catch is the fact that you are required to pay a majority of the entire mortgage sum at the end of the term. There are a lot of upsides to a balloon mortgage, but the circumstances have to match up very specifically to make it a good fit.

FHA Loans:

An FHA loan is for a very specific group of borrowers, but can nonetheless be extremely beneficial if you qualify. Designed to be for lower income individuals that are looking to secure a home, Federal Housing Administration loans are approved in order to offer lower minimum down payments for those that can’t afford a large lump sum at signing. They also have a lower threshold for the necessary credit score in order to allow families that have less immediate income to purchase. Oftentimes this type of loan is used by first time buyers and eventually refinanced over time if their financial circumstances improve, but it is important to understand that the smaller the down payment you make, the more you will owe over the course of the mortgage.

Conclusion:

As is evident in our article, there are many different types of loans that serve a large number of purposes for those that use them. Regardless of what you may be looking for when it comes to your mortgage, there is an option out there for everybody. At American Mortgage Resource, we want nothing more than to walk you through the home-buying process and determine what type of loan works best for you. Come in today and start the next great chapter of your life!