[top]What is a Mortgage? A mortgage is a legal contract between yourself and a lender stating that if you don't pay your loan off then the lender can have your home.
30 year fixed - Mortgage that offers and interest rate that stays the same over a 30 year period.
15 year fixed - Mortgage that offers and interest rate that stays the same over a 15 year period. Your monthly payment is higher than the 30 year, but you pay it off in half of the time
5/1 year ARM - Mortgage that offers and interest rate that stays the same over a 5 year period, then changes according to market rates and economic trends each year after.
3/1 year ARM - Mortgage that offers and interest rate that stays the same over a 3 year period, then changes according to market rates and economic trends each year after.
3/3 year ARM - Mortgage that offers and interest rate that stays the same over a 3 year period, then changes according to market rates and economic trends ever 3 years after.
Ballon mortgage - Mortgage that offers an initial interest rate that is lower than fixed mortgages. It keeps this low fixed rate for five to seven years and then requires a "balloon" payment. The balloon payment is the final payment of the loan and pays off the entire balance.
Interest only mortgage -The borrower pays only the interest that accrues on the loan balance each month. Because each payment goes toward interest, the outstanding balance of the loan does not decline with each payment.
Shop around - Always check out different lenders and compare their interest rates and fees.
Negotiate interest rate - You can always try to negotiate a lower interest rate.
Negotiate fees - Try to negotiate lender fees (document preparation fees, or the lender's attorney fees)
No to PMI - Pay 20% down on your loan so you don't have to pay for PMI insurance. This can add up to $100-$200 monthly on your payment.
Choose right mortgage - IN terms of the long run you are going to pay more in interest on a 30 year mortgage compared to a 15 year. So keep this in mind when deciding.
Pay extra payments - Always make extra payments when possible. It will help you pay your mortgage off sooner, and you will pay less in interest payments monthly.
Bi-weekly payments - Can reduce 30 year mortgage to 23 years, just by splitting up your montly payment and paying everyone 2 weeks instead of monthly.
Points - Pay for points if you are going to hold the loan long term. You will pay for the lower interest rate, but you will benefit in the long run.