How Mortgages Work

Are you new to the mortgage process? You probably are if you've never purchased a home before, but thankfully it's all fairly easy. A mortgage is simply a very large loan that a lender gives to you, which you typically have somewhere between 15 and 30 years to pay off. Until your mortgage is paid off, the lender is home's title owner and has the right to sell the house should you fail to make your payments on it. Of course, your mortgage will also come with an added interest rate that you'll have to pay on top of the loan. Most people place a sizable down payment on their loan, which goes towards paying off the home's price and lowers the interest rate. The interest rate is where most types of mortgages differ; it's why we think fixed rate mortgages are better than the rest, financially speaking. Also, make sure to read our finding your new home page for important tips!

Why Fixed Rate Mortgages?

Florida Fixed Rate Mortgages has always been a strong proponent for fixed rate mortgages over adjustable rate mortgages and balloon mortgages, usually because they offer the most stable option in paying for your home. With a fixed rate mortgage, you'll have the same interest rate on your mortgage from start to finish, so you'll never have to worry about a rate increase and larger monthly payments. Other loans have rate increases, which some people may not be able to afford. Here's some information about the two other major types of mortgages:

Adjustable Rate Mortgage:

Adjustable rate mortgages, or ARM's, look exactly like fixed rate mortgages initially and some may even lower interest rates at first. However, after a sever year period, they will go through what is referred to as an adjustment period. In most cases, the rates will increase during this time and may continue to do so for the life of the loan, which could end up raising your mortgage by thousands of dollars.

Balloon Mortgage:

Balloon mortgages also start off similarly to fixed rate mortgages, but they last for a shorter period of time. Typically, balloon mortgages do not last much beyond ten years, at which point the entire balance of the mortgage is due. Since most people don't have thousands of dollars lying around to pay off a large mortgage balance, we do not recommend investing in a balloon mortgage.