Oct. 27, 2010

Understanding Hawaii's Fixed Rate Mortgage Loan Basics

A fixed rate mortgage is the most common mortgage loan type available for home-buyers. They offer payments that are predictable, and enable home-owners in it for the long haul, to budget themselves and protect themselves from rising interest rates. But still, fixed rate mortgages aren't for everybody, since they do carry higher rates of interest and reduce your buying power.

 

A few of the features of these loans are the 'set rates', the low payments over the long term, and low amount of risk. Your loan application itself will have much to do with determining your rates. The market is actually what sets the rates. If you want to lower your rates on your interest, ask about paying some points up-front. But only use this particular option if you plan on staying there over several years.

 

The long term low payments make this a very attractive loan. Across time inflation raises the prices on everything, except on this mortgage payment. And if your salary happens to increase, as many do, then the mortgage now takes up less of your monthly income.

 

The fixed rates of interest are what really appeal to borrowers. You won't spend time worrying about rates rising or any type of balloon payment. And you also have the luxury of paying the loan off early, which saves plenty in interest.

 

The terms of these mortgages are usually set up on thirty or fifteen years. There are more options available now concerning fixed rate loans than in times past. The most popular are still the thirty year deals, which also enable you to qualify easily for shorter loans.

 

The fifteen, the twenty, and the forty year mortgage can be had as well. Lower interest rates can be gotten on fifteens and twenties, but the payments can be as much as 15% higher than the good old thirty year mortgage. A shorter loan can also save on interest, which appeals to people wanting to pay off a loan before they retire, or before they send their kids to college. The forty year loans are a lot less common, and carry low payments per month, but higher costs in interest.

 

You can even pick up a 'bi-weekly' mortgage, where you pay like it sounds, half the monthly payment twice a month. The at the years end, you've made an added payment on your mortgage. This means you can repay it in a period of 18 to 19 years. Most lenders will usually allow you to roll this over to the thirty year term without incurring penalties.

 

With all the benefits associated with Hawaii fixed rate mortgages, they still aren't the right fit for everyone. You can find plenty of alternative loans that will help you to achieve your goals and actually borrow more than with the fixed rate loans. If you relocate within seven years, you can pay more in your interest payments than by just going with the adjustable rate home mortgage. Many home-owners move within their first seven years of having a home. You get locked into a specific rate of interest that can drop in the near future.

Posted in Hawaii Home Loans
Share This Post
Please enable Javascript to comment on this blog