Buying a house in South Florida is an exciting time in your life. But it can also be overwhelming. It takes time just to find the right home to fit your needs. But once you’ve found the right home, next comes the dreaded process of home financing in South Florida. There are many different types of mortgage loans in South Florida. But which is the right type for you. More homebuyers are now opting for a fixed rate mortgage in Delray Beach.
There are several factors to consider when choosing a mortgage in Delray Beach. They include the interest rate, the amount of time you will own the home and the price of the home. One of the advantages of choosing a fixed rate mortgage is the interest rate stays the same throughout the life of the loan. Although adjustable rate mortgage loans (ARMS) typically have a lower interest rate, the borrower has no control what will happen when the loan resets. This can result in higher payments.
The sum of the market index determines the new interest rate in an adjustable mortgage rate. By choosing a fixed rate mortgage the loan portion of the payment stays the same each month. The borrower is able to plan a budget and their finances for the future. When enrolling for any home mortgage loan, there’s always the possibility for a prepayment penalty. This includes fees charged by the mortgage lender in Delray Beach when the loan is fully paid before the maturity date. Fixed rate mortgages are less likely to have a prepayment penalty.
Once a homebuyer has chosen a loan and starts making mortgage payments, they are responsible for two parts. This includes the interest and the principal, also known as the amount of the mortgage. The term amortization is the reduction of the value of the principal. When your payment isn’t enough to pay for the interest and principal, it’s known as negative amortization. Once this happens, the difference in your payment and the amount due is then added to the balance of the loan. If you have a fixed rate mortgage loan in Delray Beach with negative amortization, you will be responsible for graduated payment mortgages. Payments will start out small and will gradually increase to pay off the loan before the maturity date. The advantage of having a fixed rate mortgage loan allows the borrow to know exactly how much they need to pay. Choosing an adjustable rate mortgage loan bring a little more uncertainty.
With new record-low interest rates, fixed rate mortgages are an excellent option for homebuyers in Delray Beach. If you’re seeking to enroll for a mortgage loan in Delray Beach, call the experts at Ace Mortgage Corp. to discuss which mortgage loan is best for you.