Renton, Washington is typical of Washington with its lush green trees, but it also has Lake Washington at its edges. Lake Washington is a great place to have a lot of fun on beautiful, sunny days. Whether you already live in Renton, Washington, or you are relocating, there are plenty of mortgage options available to you and your family.
Mortgages allow you to purchase a home without having the entire sale price in a savings account. A mortgage is a lien on a property. There are two common and uncomplicated mortgages. They are fixed rate and adjustable rate mortgages. While there are many types of mortgages available, these are the ones that often serve best when buying a home.
A fixed rate mortgage has a fixed interest rate. Therefore, it has a fixed monthly payment. Interest rates are based on the economy and housing market. As these aspects change, so does the interest rate, so it is a good idea to lock in a great interest rate on a home when you have the chance. Another benefit to the fixed rate mortgage is the long life span, which is typically 15 to 40 years. While you don’t have to keep the mortgage for the entire time, it is often wise to select a 30- year mortgage when buying a home. This will provide you with a lower interest rate and affordable monthly payments.
An adjustable rate mortgage has a variable interest rate and monthly payments. Most adjustable rate mortgages are interest only loans, so you won’t be paying anything to the principle. This is great when you have the initial low interest rate because it is usually lower than 2%; however, when the interest rises, you start paying more in monthly payments and losing money to interest rather than paying on the loan. Most investors and business owners choose adjustable rate mortgages, because they will be paying it off in a few years. Most adjustable rate mortgages are 3, 5, 7, or 10-year loans. The benefit is the initial low interest rate and the ability to establish credit. If you have poor or no credit, having an interest only mortgage can help you establish better credit, and then you can refinance to a better loan.
Refinancing is paying off your existing loan with a new loan. This means that the old loan can be turned from an adjustable rate mortgage to a fixed rate mortgage or vice versa. The idea, when refinancing is to obtain the best interest rate, which is obviously lower than the one you have now, and lower your expenses. When you lower your interest rate you lower your monthly payments; this may be enough to help you out if expenses are tight. If you still need to save a little more, then you probably want to consolidate your other higher interest rate debts. When you consolidate credit cards and other high interest rate loans into your mortgage, you will be saving interest and a little on monthly payments.
If you find refinancing is not the option for you because you need a little extra cash for emergencies or other personal things, you can procure a home equity loan. A home equity loan is a second mortgage because it does not pay off the first loan. Instead, you have a loan with a special low interest rate and a second mortgage payment. This can be good if you are in need of a financial help. If you need to remodel your kitchen, but can’t afford to do so in one lump sum, you can gain the equity from your home. Equity is the appraised value of your home minus the amount owed on your existing loan. Often, credit cards have a much higher interest rate, so paying them off with the equity in your home can help you stay out of debt and save you money.
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