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Mortgage Primer

There is more to a mortgage than how much you qualify to borrow. To decide what kind of home financing you should choose, think about your long-term plans and financial goals as well. For example, if you think you may change jobs within three years, you may be better off getting an adjustable-rate mortgage. An adjustable-rate loan has a low interest rate in the early years of the loan, while a fixed-rate loan stays constant at a higher rate. With an adjustable, you will pay less for short-term ownership of your house. On the other hand, if you think you may keep the house more than 5 years, a predictable fixed-rate loan is probably a better choice.

Before the 1929 stock market crash, cash purchases of homes were the norm. Or if money was borrowed, it was on a term that typically did not last much more than 5 years. That made payments relatively steep, which is part of the reason so many homes were lost in the Great Depression.

After World War II, the U.S. government created a mortgage program that allowed veterans to make affordable payments over a 30-year period.

Weighing your Options

Today, the 30-year fixed-rate mortgage, while still the most common way to buy a home, is just one of many financing options available. Indeed, many mortgages today are almost custom-tailored to individual needs.

Mortgage lending is a highly competitive field. Information on mortgage rates, which can change daily, is available in local newspapers, through mortgage brokers and from individual lenders. When you are shopping for a loan, interest rates tell just part of the story. You will also need to study the various fees lenders charge.

Your RE/MAX Southern real estate professional can recommend lenders to check in with prior to beginning any serious house hunting, so you will know exactly what you can afford.