Owning a home is the hallmark of the “American dream” and one of the biggest investments of your life. But deciding which mortgage is best for you isn’t something to jump into blindly. Before you choose just any home loan, be sure to compare your options first so you can make the best decision for your future.
Buying a home isn’t the same as it was seventy years ago, which is why matching the right mortgage to your lifestyle is key. Gaining a deeper understanding by exploring these two types of home loans will help you make an informed decision that’s best for your financial future.
A conventional 30 year fixed rate mortgage is the most common type of home loan. It’s best for those who are ready to settle down in one location for a long period of time. If you have the means to put down at least 20%, you may be able to opt-out of holding private mortgage insurance, which would lower your monthly payment. A 30 year fixed mortgage loan offers the benefit of steady monthly payments that allow for predictable budgeting, especially when rates are low.
A 10/10 adjustable-rate mortgage (also known as a variable rate mortgage) is a home loan with an interest rate that adjusts every ten years. It offers a fixed rate for the first ten years of the loan, then the rate changes every ten years based on market conditions.
If you’re planning to move or sell the home after a few years, a 10/10 ARM may be a good fit for you. This home loan offers more purchasing power during high rate environments because the initial rate is usually lower than that of a conventional mortgage. This may translate to an initial lower monthly payment, offering homeowners additional saving opportunities. Just keep in mind that there is the chance that the interest rate may increase or decrease depending on market conditions.
If you’d like to explore monthly payments to get an idea of what’ll fit best in your budget, give our mortgage calculator tool a try. You can try different rates and terms to see what your estimated monthly payment would look like.
You can take your research even further by downloading our “How Much House Can I Afford” eBook, which gives you access to tools and tips for finding your maximum house hunting budget.
When it comes to choosing the best home loan to fit your needs and lifestyle, it’s best to work with a lending professional like one of our Mortgage Specialists. Our Mortgage team will listen to your needs and goals to find the best mortgage option for your future investment. We’ll answer any questions you have and walk you through every step of the application process.
At Peach State, we understand what it takes to turn homeownership into a reality, and we’d love to help make your dreams come true. We'd love to help you get pre-approved today!