Looking for Best Home Mortgage?
Before you say yes to a mortgage that you think is the best home mortgage, you must define as to what makes a specific mortgage, the “Best” home mortgage for you.
The answer to this is very subjective and will vary from person to person.
Defining... Best Home Mortgage
Perhaps, “Best Home Mortgage” can be defined as a mortgage that suits the current financial needs of the borrower giving him the lowest interest expense over the term of the mortgage while giving him as much flexibility as possible in the foreseeable future, as the buyer can foretell.
While choosing a home mortgage, each individual should consider his current circumstances. He should also make some projection of his future financial scenarios. This would include the borrower’s current income, future income at the time of renewal, how long he expects to stay in the house, would he be able to pay some lump sum principal amount during the mortgage term and so on.
Mortgage for an Individual
For an individual, whose income is predictable over the next 5-6 years and who is unlikely to pay off additional lump-sum payment during the term, a mortgage with the lowest fixed interest rate with some provision of prepayment is probably the best home mortgage for him.
On the other hand, for a home buyer who will have access to funds during the term of the mortgage and would want to pay it towards the outstanding amount, the lowest interest mortgage that would allow him to pay without any cost or penalty would be the best home mortgage for him.
Mortgages for Bi-Weekly Payments
For those who get paid every two weeks, a mortgage that would allow bi-weekly payments with additional privileges of prepayment and lowest interest rate is the best mortgage for this home buyer.
A home buyer who is thinking to sell in a few months, would be ill advised to lock himself into a long term fixed mortgage with heavy penalties for prepayment of the mortgage. For such a person “Open” mortgage would be the best home mortgage even when such a mortgage is at interest rate higher than others.
Best Home Mortgage for Senior Citizens
For senior citizens, who are retired and are on fixed income, a mortgage that keeps their mortgage payments low and interest expense low without the uncertainty for many years would be the best home mortgage. If they are not going to retire the mortgage early, it would be unwise for them to pay additional cost for such a privilege.
If the current home mortgage interest rates are high and lower interest rates are on the horizon, an open home mortgage may be the Best Home Mortgage, even at a slightly higher interest rate. Back in 80’s when interest rates were running at 18%, the home owners who opted for open mortgage were handsomely rewarded when interest rates dropped to under 13% in a less than one year period. They were able to avail the lower interest rates and thus reduce their mortgage interest expense.
At all stages and in all cases, further precise mortgage calculationsof cost and benefits must be done to arrive and choose the best home mortgage.
Needless to say, the criteria to measure the “Best Home Mortgage” would vary from person to person and would depend upon individual home buyer’s circumstances.
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