While William Shakespeare once wrote in his legendary play Hamlet to “be not a borrower nor a lender be,” many people do in fact take out loans in our society to pay for all sorts of things. The most common loan type, however, is a mortgage on a home.
While so many people will take out a mortgage in their lifetimes, learning all the ins and out about your mortgage when buying your home can be a bit tricky. It is important to make sure you know what kind of mortgage type you are taking out and what each kind of mortgage entails. Read on for some tips and tricks to navigating through mortgages!
Things to Know About Your Home Loan Type:
- While there are many different types of home loans out there, the most popular kind of mortgage is a fixed rate mortgage — in fact, research shows that approximately 75% of all home loans are fixed rate ones. Fixed rate ones are fairly straightforward: you pick a duration of usually either 10, 15 or 30 years to pay your loan back. While most individuals tend to go with the 30 year, it is up to you — and your spouse or partner, if you have one — to assess your financial situation and choose the time interval that’s right for you.
- Another loan type that is well known is a reverse mortgage. This unique kind of loan is only available to individuals above the age of 62, allowing the individual to use their home equity to get payments from the loaner instead of paying them themselves. You may want to do some thorough research before getting one of these, however, as they are a little more complicated that a traditional fixed rate mortgage.
- Loans come in all sizes, from small to jumbo. That’s right, jumbo. A jumbo loan is found in the United States’ most expensive housing markets and is a mortgage for a home over $625,500. While these loans are definitely less prevalent than a fixed rate or even a reverse mortgage, they are indeed an attractive option for those looking to buy a pricey home.
- The most important thing when taking out a mortgage is to feel comfortable with who your lender is. It is a good idea to do research before choosing a lender — the Internet has a wide variety of websites available to let you look at reviews of lenders and to look up their information on their own websites. If you’re skeptical, try asking some friends and family members for advice on where — or where not — to go.
Do you have any advice for people taking out a mortgage for the first time? Tell us your thoughts in the comments below!