Planning ahead and saving money for a mortgage is one of the best ways to save for a home. While this seems ideal, plans don't always work out this way and the house of your dreams may come out on the market before you are fully ready for it. Just because you cannot afford the payments right away doesn't mean you should give on the home. By working with a mortgage company, you have the ability to get a mortgage set up where you pay more later so that you can still afford the house now. If you're expecting a big raise, job change, or some other type of money windfall, then you should consider one of the following three mortgage options.
Interest Only Payments
One of the best ways to get the lowest monthly payments for the start of your mortgage is with interest only payments. Through this type of mortgage, your monthly payments will only be the interest costs for a set period. For example, you may make interest only payments for the first two years of the mortgage. After this period, the mortgage payments will typically adjust to a 30 year fixed rate mortgage. This allows you to save money for the first couple of years and make your dream home affordable.
Balloon Payment Mortgage
If you want to have your whole home paid off at a specific point, then you should consider a balloon payment mortgage. These mortgages start off like a traditional mortgage. You will make payments for five years or longer until it comes time to make one final balloon payment. This last payment is the final balance of the home loan. If you expect to build savings or have a large cash windfall coming, then you can select a balloon payment mortgage option that will have your whole house paid off in the near future.
15 Year Mortgage Refinancing
The best part about taking out a mortgage is the ability to refinance and change the terms at a later date. If you want to make bigger payments on your loans in the future, consider getting a 15 year fixed rate refinancing loan. After making your 30 year or 40 year mortgage payments for a few years, you can increase the amount you're paying monthly with a 15 year fixed rate mortgage. The payments will nearly double in size, and you'll have the whole house paid off a lot sooner.
For more information about these forms of home loans, work with a representative from The Toby Team.