What You Don't Know About Your Home Mortgage Could Shock You!

What You Don't Know About Your Home Mortgage Could Shock You!

By Matthew Bartlett

Have you ever taken a moment to think about what type of mortgage you have on your home? Is it a traditional 30-year fixed loan, or is it a 30-day pre-computed loan, or do you have a Daily Average Unpaid Balance loan?

Many things in our financial lives are uncertain - inflation, energy prices, and the costs of living to name a few. However, with a fixed rate mortgage, homeowners have the security of knowing that their interest rate will never go up over the term of the loan. The guesswork & uncertainty of understanding your home loan has been removed.

During the home buying and refinancing boom a few years ago, adjustible rate mortgages (ARM's), interest only loans and hybrid loans were the popular choice. However, in todays market of rising interest rates and forclosures, it's not benificial to have an adjustible rate mortgage because the difference in the initial interest rates is small or non-existent. After you factor in your closing costs, the Annual Percentage Rate (APR) is even greater on an ARM versus a fixed rate mortgage.

So do you know where you stand on your current mortgage? A simple checklist will lead you to the answer:

Do you know the maximum interest rate that you can be charged?

Do you know the maximum that your interest rate can rise at one time?

Do you know the index that is used to determine your rate?

Do you know your original interest rate?

Do you know how often your rate can change?

Take a look at the answers and chances are you might be shocked by just how little you know about the largest investment you will ever make - your home!

If you currently have an ARM, interest only loan or another type of mortgage I encourage you to speak with a financial professional. They will be able to show you how to refinance with a fixed-rate mortgage, and take the guesswork and uncertainty out of your home loan.