Flower Mound, Texas is part of the massive Dallas / Fort Worth metropolitan area. Flower Mound is also home to Time Warner Cable for the South and Southwest areas. You will have a small town vibe in Flower Mound, despite its population of over 63,000 residents. Flower Mound was named for a privately owned piece of land with a hill of several thousand flowers.
Residential mortgages are important for anyone looking to move into Flower Mound. Two of the most common mortgages are fixed rate and adjustable rate mortgages. These mortgages are less complicated than the many other mortgages available and worth discussing for those who are first time homebuyers.
Fixed Rate Mortgages
Fixed rate mortgages are a loan with a fixed interest rate for the life of the loan. This means your interest rate will never change and your monthly payments will not change. The longevity of these loans is determined by you; you might choose a 30-year mortgage or decide that is too long and wish for a 15-year mortgage. Whatever you decide will determine what your interest and monthly payments will be. Other factors in determining your interest rate will be your debt ratio, credit scores, and the market at the time you obtain your loan.
Debt ratio is defined as the amount of debt you have against your income. This means your debt needs to be lower than your income for a positive outlook. Your credit scores conversely will need to be rather high for a better loan. This is not to say you won’t be able to obtain a loan if your credit scores are less than favorable, it just means you may have penalties on your mortgage. The current interest rate available will also affect your mortgage. This interest rate is what a lender can charge you. Most lenders want you business so they will look at all of these factors in determining the interest rate they can quote you. If your debt ratio is higher they may suggest a different type of loan, such as the adjustable rate mortgage.
Adjustable Rate Mortgage
An adjustable rate mortgage is a loan with a variable interest rate. This means your monthly payments will change over the life of the loan, when your interest rate changes. Initially the interest rate may be as low as 1% or 2%. This will help in the beginning years of the loan by establishing credit and raising your credit scores as long as you pay on time. With an increase in your credit score, you can then refinance to a better loan, such as the fixed rate mortgage. The adjustable rate mortgage has options within it: interest-only, interest and principle, and minimal monthly payment. Interest-only means you pay nothing toward the balance of the loan. Interest and principle means you will pay the interest and an amount towards the balance. The last option is paying only what you can afford and this may mean you pay only the interest.
Refinancing
Refinancing is one option to lower your interest rate. Another option to look at when needing to help out your monthly expenses is the home equity loan. This is a second mortgage with a special low interest rate. At the end of the process, you will have the equity from your home and a second loan. This differs with refinancing because refinancing will pay off your existing loan. Equity is the appraised value of your home deducted from the amount owed on your existing loan. This can help you pay off higher interest rate debts and have a lower monthly payment.
Seek a mortgage professional to determine what options will be right for you whether you already own a home or are buying a home for the first time. Please fill out the form today to learn more about refinancing, mortgages, or home equity loans.
