Mortgage Tips

A fixed-rate loan offers a monthly payment that is known and does not change. Most fixed-rate mortgages are for loan terms of 15 or 30 years.

After a predetermined initial term, the interest rate on an adjustable-rate mortgage loan is re-set periodically. This ensures that the rate reflects current market interest rates. For example, a 3/1 ARM loan offers a fixed rate for the first three years, adjusting once a year thereafter. A 5/1 ARM loan offers a fixed rate for the first five years, adjusting yearly thereafter.

This is an ARM loan that allows you to convert to a fixed-rate loan at or before a specified time. The conversion privilege lets you start off with a low variable rate, then "lock" the rate at a fixed amount depending on market conditions.

These loans often have interest-only payments, in which case the loan principal is not reduced and the entire loan amount is due at the end of the loan term.

Also, be sure to consider the programs that are available to first-time buyers through city, county, state and Federal entities. You may qualify for counseling services and/or down payment and closing cost assistance.

Once you've decided on a mortgage loan type, take the next important step. Getting pre-qualified and pre-approved for your loan is critical for many reasons. It can help you narrow your home search to save time, and help you get a clearer picture financially.

Equally important to knowing your credit score is staying familiar with current mortgage rates. These rates change on a daily basis, so it's important to check them often during your home search.

Below are several links to financial institutions that publish their rates daily as well as the different types of mortgages which with you should familiarize yourself.