Mortgage Options: Finding Flexibility in Your Home Loan

by Gabriel Traverso
CMR Columnist

Every homeowner has different priorities when it comes to finding a new home loan thats right for them. For some it's more important to have the lowest rate, others want to avoid paying any closing costs. What are you looking for?

New Home Loan Options

When it comes to getting a new home loan the traditional mortgage has long been a fixed-rate loan, usually in 10-, 20-, or 30-year form. Once you deviate from tradition to look at some of your alternative mortgage types, the two most common you come across are adjustable rate mortgages and interest-only mortgages. Over the past few years the line between these loan types has blurred and now there are also option hybrid ARMs. These new mortgages offer homeowners choices they have never had before.

How do These Mortgages Work?

Many lenders are offering flexible loan options and some of them use different names, but all share common characteristics. Adjustable rate hybrid interest-only loans give you choices of how you want to make your mortgage payment. The loan usually gives you four choices: a minimum payment, an interest-only payment, and then 15- or 30-year fully amortizing payments. These home loans usually offer you these choices for a certain timeframe--a fixed interest rate for an introductory period and you can make interest only payments for the first ten years of the mortgage.

Is it Right for You?

The bottom line is--if you need payment options, they're out there. Talk with your loan officer to get details and then look at your income, your budget, your future plans, and your investment goals, and make sure you can afford the loan.

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