Buyers Fund -- No Down Payment Mortgage Assistance

	Discovering Homeownership

	Learning About Credit & Income

	Banking on a Mortgage

	Understanding Settlement Costs

	Homeownership

	Understanding Refinancing

There are many types of mortgage instruments, and all have good features, but may not be suitable for your particular purposes.

You should ask yourself:

• How long will I be in my home?
• Are the current rates high?
• Will my family be growing, needing more room?

Shop around and see what rates are available, and remember the lowest rates may not be the best as sometimes the lower rates may have additional points or closing costs that you are required to pay. Remember that rates change often. When you are shopping call a number of lenders the same day in order to get a fair comparison. Ask what if any points are necessary and what the origination fee is.

The type of mortgage is very important, for our purposes we will discuss three types of mortgages: fixed-rates, adjustable-rates and balloon mortgages.

Fixed-Rate Mortgages

Fixed-rate mortgages are stable and offer long-term savings. This is because the interest rate never changes over the life of the loan. The monthly payment to principal and interest remains the same for the life of the loan. Fixed-rates are typically offered for a 10, 15, 20 and 30 year terms. The longer the term the lower the principal and interest payment which allows you to qualify for a larger home, however; more interest will be paid over the life of the loan. If the market interest rates come down, your rates will remain the same and can only be reduced by re-financing your loan.

A shorter term loan, such as a 10 or 15 year loan, will have a higher principal and interest payment. It is higher because you have a shorter period of time to pay the loan back. The shorter loan is divided over a shorter period of time forcing the payment up. You will create equity faster because more of your payment will apply to the loan balance thus paying it off faster.

Next: Adjustable Rate Mortgage

Points:
1% of the amount of the mortgage loan. For example, if a loan is made for $50,000, one point equals $500.

Loan Origination Fees: The fee paid to your mortgage lender for processing the mortgage application. This fee is usually in the form of points. One point equals 1% of the mortgage amount.

Fixed-Rate Mortgage:
A mortgage with an interest rate that does not change during the entire term of the loan