| How
to choose the right loan
Purchasing
a home is the single largest expenditure you will make, so manage the
financing with great care.
There are many different loan
products available today and it is often difficult to pick the one best
suited to your financial goals. By answering the following questions,
you'll get a feel for what’s best in your financial situation.
How long do you intend to occupy
this property?
| Length of stay
in property |
Loan programs
to consider |
| 1-3 years |
1- or 3-year adjustable rate mortgage
(ARM) |
| 4-6 years |
5- or 7-year ARM; 5- or 7-year
balloon |
| 7 years |
10-year ARM; 15-,20-, or 30-year
fixed rate mortgage |
Would you prefer a lower payment
or more rapid accumulation of equity?
| Financial goal |
Loan programs
to consider |
| Equity buildup |
15- or 20-year fixed |
| Minimize payment |
1-, 3-, 5-, or 7-year ARM; 30-year
fixed |
What do you feel interest rates
will do in the future?
| Overall I believe
interest rates will |
l Loan programs
to consider |
| Rise |
30-, 20-, or 15-year fixed; 7-
or 10-year ARM; 7-year balloon |
| Fall |
1-year ARM |
| Stay about the same |
1-, 3-, 5-, or 7-year ARM |
How well do you tolerate risk?
| Risk toleration |
Loan programs
to consider |
| Uncomfortable with vulnerability
to interest rate fluctuations |
15- or 30-year fixed 10-year ARM
|
| Comfortable with market changes |
1-, 3-, 5-, or 7-year ARM; 5- or
7-year balloon |
References:
RealEstate.com (January 19, 2007). How to
choose the right loan. Retrieved June 23, 2007 from www.realestate.com.
|
