When you are looking for a new home, whether it is your first home or your fifth, you need to make sure that you get the right kind of mortgage. There are a number of different options available to you in South Carolina, and it is important that you understand how they differ. Choosing the mortgage that is best suited to your individual needs can help you save tens of thousands of dollars over the next few decades.
The two most common varieties of mortgages are fixed rate and adjustable rate mortgages. These differ primarily on the matter of the interest rate associated with the loan. With a fixed rate mortgage, as the name suggests, you pay the same interest rate for the entire term of the loan. The rate on an adjustable rate mortgage, on the other hand, can vary over time.
One of the major advantages of a fixed rate mortgage is the security that it offers. You know exactly what rate you will be paying, and you do not have to worry about it increasing so that you suddenly have to pay more each month. This can make it easier to plan ahead and budget for your housing expenses.
Of course, one disadvantage of these loans is that you may find yourself paying a higher rate than you might otherwise. If interest rates drop, then you may be paying a rate that is one to two percent higher than the current rate. This means that you will have to go through the effort of refinancing your mortgage to get a lower rate.
With an adjustable rate mortgage, it is easier to lower your interest rate, but you do so at the cost of increased risk. While rates may drop over the term of your loan, thereby reducing your monthly payments, they may also rise. If they do, you will have to find a way to pay more each month.
Many adjustable rate mortgages offer lower initial rates for several years. After the end of this period, your interest rate can then fluctuate. You may be fortunate enough to see your rate go down, but many people have had their rates increase. If you are on a tight budget with little room to maneuver, a fixed rate mortgage may be a better choice for you.
There are other types of mortgages that may also be available to you. For example, a balloon mortgage is a fixed rate mortgage where you make low monthly payments for a certain period of time. After this time is up, you will have to pay off the entire balance of the loan. Interest-only mortgages are similar, except that your payments are only applied towards the interest for that length of time.
Understanding the various types of mortgages that are available to you in South Carolina is important when you are in the market for a new home. Take the time to educate yourself on this topic so that you can get the best deal for yourself. To find the best mortgage rates in Myrtle Beach, we suggest you check out MyrtleBeachMortgagePlace.com
Learn more about the types of mortgages: http://en.wikipedia.org/wiki/Mortgage_loan