Are you looking for a home loan in Portland, Maine? Whether you are planning on buying a home, refinancing, or getting a home equity loan, there are several types of loans you can choose from. The three most common are a fixed rate loan, and adjustable rate mortgage or a hybrid.
Fixed Rate Home Loans
Fixed rate home loans have a fixed interest rate for the life of the loan. Currently, interest rates are really low, and that makes a fixed rate loan a good option. Of course, if interest rates start to decrease, you will be stuck with a comparatively high interest home loan.
One advantage of a fixed rate home loan is that you know exactly how much the loan will cost you, and how much your house payments will be for the duration of the loan.
You can use a fixed rate home loan to purchase a home or to refinance. Refinancing older adjustable rate mortgages to a lower fixed rate is a popular choice right now. You can also refinance a higher fixed rate mortgage to get a lower interest rate.
Home equity loans almost always have a fixed interest rate.
Adjustable Rate Mortgages
ARMs are a popular choice when interest rates are decreasing. With an ARM, you can take advantage of falling interest rates without refinancing your home. Of course, if home loan interest rates begin to increase again, people who have ARMs will experience higher house payments and interest adjustments.
ARMs are used both for home purchase loans and for refinancing.
Hybrid Loans
Hybrids are a combination of a fixed rate and a variable rate loan. One popular hybrid loan in today’s real estate market starts out with a very low interest during the introductory period of the loan. That introductory period can last two to ten years. At the end of the introductory period, the loan converts to an adjustable rate mortgage. When that happens, your interest level increases, and so does your house payment.
Hybrid loans can be used for refinancing, but they are more commonly used for a home purchase loan, especially with first-time buyers. The introductory rate can be well below the current interest rates, and that allows people to buy a home with lower payments during the early years of their mortgage. Most first time buyers are young, and they expect their income to rise as they get established in their careers. By the time the loan converts to an ARM, they can afford the higher payments.
Whether you are refinancing, purchasing a home or looking for a home equity loan in Portland, we can help you find a lender. Simply complete the form at the bottom of this page, and one of our agents will contact you to discuss your home finance options with you.
