If you’re asking the question “What mortgage is right for me?”, you’re likely ready to do some financial homework ahead of buying your new custom Florida home.
It’s a smart question even if you’ve bought a previous home. As with most significant long-term purchases, our priorities and circumstances can change during the life of a home loan, and we want to make sure we get the best fit from the get-go.
Enter ICI Homes’ primer on mortgages. It’s not exhaustive — google “jumbo loan” or “physician loan” as proof — but it offers a helpful snapshot of the most common home loans
So, sharpen your pencils or pull up the keyboard on your favorite digital device. Dive right in to discover what type of mortgage is right for you. But first, save this link for more financial tips and resources.
Fixed-rate mortgage
The most common mortgages, and likely the ones you’ve heard the most about (or have paid off on a previous home). These typically come in 15-year and 30-year increments.
You’ll pay a higher monthly payment in a 15-year loan, but the advantage is paying it off faster. It’s the opposite in a 30-year loan, which presents a lower monthly payment and a longer payoff.
In both types of fixed-rate mortgages, your interest rate at the outset remains the same throughout the length of the loan, as does your monthly payment. It’s easier to account for in your monthly and annual budgets — thus, the security and stability aspect of a fixed-rate loan. If rates fall, you’ll need to refinance to take advance of the dip.
Adjustable-rate mortgage
An option for buyers seeking the lowest interest rate at the beginning of their home loan.
Your interest rate is lower than the market norm for a certain number of years at the beginning of the loan. Once that period ends, your payments will “adjust” up or down according to current interest rate at certain intervals over the remainder of the loan. These intervals are established at the beginning of your mortgage.
There’s risk here. Your interest rate could skyrocket or plunge over the course of an adjustable-rate mortgage, making monthly payments, and budgeting for them, less of a sure thing.
Government-backed loans
These are federal programs geared toward helping potential buyers in various communities attain mortgages. They can offer lower down payments and credit help, but require extra fees and insurance, and are available only to buyers who fit each program’s specifications.
FHA (Federal Housing Administration), VA (Federal Department of Veteran Affairs), and USDA (U.S. Department of Agriculture) are the most familiar federal loan programs.
Try our financial tools
Ready to learn more? ICI Homes’ online tools allow you to compare certain loan parameters in your quest to determine the right mortgage. Cruise to our website and click the Resources tab. Choose Financial Tools from the dropdown menu and launch your exploration.
