Abby's Guide to Home Mortgage Loan
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The best mortgage?

There are some new kids on the mortgage block these days.

There’s the two step mortgage where you get a lower fixed interest rate for a period (say five years) and then is adjusted to the rate that exists when the period ends. The uncertainty of what that rate will be may make you nervous and rightly so. However, it may help you get into the real estate market.

Graduated payments are just that…you have a graduated payment schedule where payments the first years are lower than the current fixed rate and after the grace period higher than that rate. Here you can borrow more money because you qualify for the lower initial payments and if you sell it before the grace period ends, you have saved some money.

Another type of exotic is the Shared Appreciation Mortgage, offered by private investors and even your family. You borrow the cash to buy the home and agree to share a part of the future appreciation of the home. These SAMs should only be used if there is no way to obtain a house as investors can claim fifty percent of the appreciation. Ugh.

There many options, but each can end up costing you more than a fixed rate mortgage in the long run.

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