Guide to Refinance, Mortgage,
& Home Equity Loans in
Lexington, Kentucky (KY)

With more buyers than sellers and a lot of activity among first time homebuyers, there are many reasons to look in Lexington, KY for your first home. Once you decide on buying though, you should think about how you are going to pay for it.

Most people do not have enough money saved to purchase a home, so you will likely need to borrow the money through a mortgage. A mortgage is a long term loan that allows you to buy a house and then pay your lender back over time, so when it comes time to buy home in Kentucky, it is important to have an idea of what mortgage options are available.

There are three basic types of mortgages that you should be aware of. Though they are not an exhaustive list, they will give you an idea of what your basic options are.

Fixed rate mortgages: FRM

In a fixed rate mortgage, the term of the loan and the interest rate does not change. In fact, once you close on your fixed rate loan, nothing will change in terms of your monthly commitment to the loan.

At the beginning of your fixed rate loan, you will get an interest rate. That rate will never change. This means that the lender is the one that will be assuming most of the risk. If interest rates rise, the lender loses the chance to make more money from your loan. On the other hand, if the rates go down, you can consider refinancing to benefit from those rates.

Throughout the loan, you will also be able to count on a fixed payment. Your payment amount will be the same every month over the life of your loan. This makes it predictable and easy to budget, which can be appealing to borrowers on a limited monthly budget.

The real benefit of a fixed rate loan in Lexington is that you will always pay on the principal of the loan. This means that your equity will grow over time and you can then use that equity to pay other debts later with a home equity loan.

Adjustable rate mortgages: ARM

An adjustable rate mortgage is the opposite of a fixed rate mortgage in a few ways. Instead of having a fixed interest rate and term length, they fluctuate with the rate market.

One of the benefits of an ARM loan is that you will usually receive a lower interest rate up front, so early on you will have lower payments. As time goes on, though, you are subject to activity in the interest rate market. While you may have a cap on your rate, you still may find yourself with greatly varying payments over time.

Balloon Mortgage

A balloon mortgage, in some ways, is not that different from a fixed rate mortgage. The payments are consistent and the interest rate is locked in; however, there is one major difference. With a balloon mortgage, you will be required to pay the balance of the loan at intervals, allowing you to have lower payments leading up to the balloon. The drawback, of course, is that you have to be ready for the balloon payment, in which you will need to repay the remainder of the loan at once, or refinance to something different before you get that far.

If you are interested in refinancing your current Lexington property, the options you will have to choose from are similar to the options of a new mortgage. One other option you have, though, is a cash-out loan. Talk with your lender about cash-out refinance loans and home equity loans to decide which option might be best for you.

As you can see, there are plenty of options when it comes to mortgages in Lexington, KY. For more information, or to learn more about other options that may fit you, fill out the form below, and a qualified mortgage professional will contact you.

Other Kentucky (KY) Guides to Refinance, Mortgage, and Home Equity Loans in Your City or Town:

(Click on any city name below for more information on finding a local or national lender near you & saving money!)

Looking for more specific information on refinancing, getting a mortgage, or taking out a home equity loan/line in Kentucky (KY)?
We can help with that – Click below for details:

Kentucky Refinance

Kentucky Home Equity

Kentucky Mortgage