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Mortgage Primer

There’s more to a mortgage than how much you qualify to borrow. To decide what kind of home financing you should choose, think about your long-term plans and financial goals as well. For example, if you think you may change jobs within three years, you may be better off getting an adjustable-rate mortgage. An adjustable-rate loan has a low interest rate in the early years of the loan, while a fixed-rate loan stays constant at a higher rate. With an adjustable, you’ll pay less for short-term ownership of your house. On the other hand, if you think you may keep the house more than 5 years, a predictable fixed-rate loan is probably a better choice.

Before the 1929 stock market crash, cash purchases of homes were the norm. Or if money was borrowed, it was on a term that typically didn’t last much more than five years. That made payments relatively steep, which is part of the reason so many homes were lost in the Great Depression.

After World War II, the U.S. government created a mortgage program that allowed veterans to make affordable payments over a 30-year period.

Weighing Your Options

Today, the 30-year fixed-rate mortgage, while still the most common way to buy a home, is just one of many financing options available. Indeed, many mortgages today are almost custom-tailored to individual needs.

Mortgage lending is a highly competitive field. Information on mortgage rates, which can change daily, is available in local newspapers, through mortgage brokers and from individual lenders. When you’re shopping for a loan, interest rates tell just part of the story. You’ll also need to study the various fees lenders charge.

Your RE/MAX Southern real estate professional can recommend lenders to check in with prior to beginning any serious house hunting, so you’ll know exactly what you can afford.