Choosing a Mortgage Loan
Selecting the right Tucson mortgage is just as important as choosing the right home. We’ll tell you how to identify the right loan for you here.Types of Mortgages
There are two primary types of Tucson mortgages: fixed-rate and adjustable-rate loans. Here is a brief explanation of each type:
- Fixed-rate loans. These mortgages have interest rates that remain the same for the life of the loan. With fixed-rate Tucson mortgages, you will know exactly what your monthly payment will be every month for the duration of the loan’s term. You will be insulated from interest rate increases, which means your monthly payment will never change despite how high interest rates get.
- Adjustable-rate mortgages (ARMs). ARMs have interest rates that fluctuate periodically according to the market conditions. The initial rate on an adjustable-rate Tucson mortgage is usually fixed, and this rate will last anywhere from one to ten years. Commonly, the initial rate of these loans is much lower than that of fixed-rate loans. After the initial fixed-rate period expires on an ARM, the rate will adjust either annually or semi-annually, but it can’t ever exceed your predetermined rate cap. The competitively low initial rates of adjustable-rate Tucson home loans allow some borrowers to buy more home than they would otherwise be able to with a fixed-rate mortgage.
Mortgage Terms
The term of a Tucson mortgage refers to the amount of time you will spend repaying it. The most popular term is 30 years, but 10-,15-, 20-, and 40-year loan terms are also usually available. Here is how shorter-term and longer-term mortgages differ:
- Shorter-term loans. These loans will have higher monthly payments, but you will pay less in interest expenses and will own your home faster.
- Longer-term loans. Longer-term Tucson mortgages can offer very low monthly payments, but you will actually end up paying more for these loans in the long run because of interest expense.
Don't let these Five Homebuying Myths discourage you from buying a home.
