M & M Mortgages Inc.Home Loans-Home Equity Loans-Best Rates Guide

                        Fixed rate mortgages are the most popular form of mortgage, one
                        which allows you to lock in an interest rate for the term of your
                        loan. If this weren't incentive enough, you may also buy-down a
                        lower interest rate. What does this mean? Let's say the best rate
                        you have found is 8% from XYZ Mortgage Bankers. For 1% of your
                        mortgage amount- $1000 on a $100,000 mortgage you can buy the
                        rate down to 7.75%. Should you do this? That would all depend on
                        how long you plan to stay in the house and how long it would take
                        you to break even on that $1000 out of pocket.

                        Here is the breakdown-
                                          100,000 Mtg for 30 yrs @ 8%     = 733.76 mo
                                          100,000 Mtg for 30 yrs @ 7.75% = 716.41 mo
                                                                           Savings     = 17.35 monthly

                             $1000 / $17.35 = 58 months to break even on the outlay.
                             Interest Savings over 30 years = $6246
                             Same $1000 invested at 6%(compounded monthly) over 30
                             years = $6022.58.

                        This example illustrates that the advantage isn't always that great.
                        If you are struggling to get the downpayment for a home, $1000
                        may be a big deal and not to break even on it until almost the 5th
                        year is something to think about. Fact is, many americans put
                        down all of their money on a home, only to move in with no safety
                        net or cushion(cash in the bank). ......something to consider.

                        Variable rate mortgages are the second most popular type of
                        mortgage. Variable rate means just that- the interest rate you pay
                        on the money you borrow will change. The interest rate you pay is
                        tied to a major consumer index with a cap, or maximum interest
                        rate you can be charged. Variable rate mortgages often allow you
                        to get started with less money out of pocket, but the risk of
                        increasing payments is always present due to interest rate
                        fluctuation.

                        Balloon mortgages- where you pay smaller monthly
                        payments(while accumulating more interest charges of course) and
                        at some pre-determined point, perhaps 15 years, the balance
                        becomes due- IN FULL. Well at that point you can refinance it, or if
                        you have been saving like you planned, pay off the remaining note.