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ColdwellHomes.com
HOMEBUYING BASICS
Decide on
a Mortgage
FIXED RATE MORTGAGE
After you are pre-approved for a mortgage,
predictable; however, interest rates tend to be
it’s time to decide on a mortgage type. There
are many types of mortgages, and choosing
the right one for you is an important decision.
The two most common mortgages are a Fixed
Rate Mortgage and an Adjustable Rate Mortgage
(ARM). If you are interested in exploring
additional mortgage programs, talk to a local
mortgage professional.
The interest rate remains the same for the
entire term of the loan – usually 15 to 30 years
– meaning the principal and interest portions of
your loan will never change. With a Fixed Rate
Mortgage, your payments are stable and
higher than with an adjustable rate.
ADJUSTABLE RATE MORTGAGE
The interest rate is linked to a financial index
so the rate fluctuates with changes in market
conditions. With an Adjustable Rate Mortgage,
your payments will vary over the life of the
loan, but it usually includes a lifetime cap
on the interest rate increase in order to protect
the borrower. The advantage of an Adjustable
Rate Mortgage is that it offers lower initial
payments, making it easier for buyers to
qualify.
When you apply for a mortgage,
have the following items available
for each borrower:
Two most recent pay stubs
Summary of current debt (credit cards,
loans, child support, etc.)
W-2s for the last two years
Federal tax returns for the last two years
Last two months’ bank statements
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