How to Choose between Different Types of Mortgages

With so many different types of mortgage available, it’s difficult to determine the right one for you. Before you start looking at available mortgages, however, it’s important to first evaluate your finances, as your financial situation is an important factor that will dictate the type of loan you need, and how much you can afford to borrow.

Step One: Evaluating Your Finances

Before you even think about the type of mortgage you should obtain, it’s important to evaluate your financial situation. Check your credit rating and FICO score, evaluate your income and debt level, figure out the size of the down payment you can afford, and determine how much mortgage you can afford and what your credit rating will allow you access to.

When it comes to your credit rating, know that between 620 and 699, you’ll probably pay a higher interest rate than if your credit rating is over 700, due to a slightly higher perceived risk on the part of lenders. If your credit rating is below 620, you may find it’s better to wait and improve your credit rating rather than be forced into a sub-prime mortgage with a high interest rate.

Step Two: Choosing the Best Mortgage

Once you have completed an evaluation of your financial situation, you’re ready to start thinking about the kind of mortgage you want. The mortgage that best suits you will depend on a long list of factors, not all of which are related to the amount of money you have for a mortgage. Think not only about how much mortgage you can afford, but also your credit rating, how long you plan to stay in the home, and whether you think your plans or financial situation might change in the future.

So what are your main mortgage options?

Fixed rate mortgage

 

Normally a 10, 15, or 30-year mortgage, you pay the same interest rate over the life of the loan.

Good for: If you like the security of paying the same amount every month and you’re planning on owning the home long-term, this is definitely the best option. There are some variations on this theme, including jumbo mortgages, which are larger-than-standard loans with a slightly higher interest rate.

Adjustable rate mortgage

 

These are mortgages with adjustable interest rates, which come in several different varieties. When you first get an adjustable rate mortgage the interest rate is lower than that you’d get with a fixed rate mortgage. However, at intervals, the interest rate can increase or decrease according to current market rates. This means your monthly repayments aren’t fixed, so these types of mortgages are more risky in comparison to fixed rate mortgages.

Good for: If you want a mortgage with an initial low rate and you’re prepared to take a risk on later rates (or you only plan to own the home for a few years), this may be a good prospect.

Interest-only mortgage

 

The standard type of mortgage is amortized, meaning your monthly repayments include both principal and interest. An interest-only mortgage is just what its name suggests – your monthly repayments don’t have to include principal (but you can pay off principal amounts at any time). This means you are not building up equity in your home while you’re only paying interest, but there are no pre-payment penalties.

Good for: This type of loan can work well if your income is at a consistent level overall but is subject to highs and lows, since you can pay off extra principal when you can afford to do so, and pay interest only when your income is at a lower level.

Balloon mortgage

 

This type of mortgage has a fixed interest rate and stable repayments over the life of the loan, with lower repayments in comparison to a fixed rate mortgage. However, the terms of the loan are generally short, with three, five, and seven years being the most common options. At the end of this time period, the entire balance of the loan is due. The final payment is typically very large, so a balloon mortgage is one which shouldn’t be taken lightly.

Good for: This type of mortgage can be a good option if you plan to stay in the home long term, want to get your mortgage paid off quickly, or if know you can afford the balloon payment. Alternatively, a balloon mortgage can be useful if you know you’ll be moving or refinancing before the balloon payment is due.

30-due-in-7

 

For the first seven years of the mortgage you have a fixed interest rate which is generally lower than that of a standard fixed rate mortgage. In the eighth year of the mortgage, the interest rate changes to be in line with whatever the current rate is at that time. For the remaining 22 years of the mortgage, the interest rate stays fixed at that rate. Another option is a 30-due-in-5 mortgage, where the interest rate changes in the sixth year.

Good for: These mortgages can be a good option if you’re planning to stay in the house for more than five or ten years and you are willing to risk the possibility that your monthly payments may change substantially when the second interest rate is due.

About the Author

Rachel Jackson is a freelance writer who writes about topics and pertaining to the mortgage industry such as refinancing home mortgage.

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The History of the Forex Markets, Sometimes Called the Currency Markets

Traders centuries ago often exchanged goods and services with other countries that utilized a different currency than there own, because of this a form of a currency exchange program has been in existence for an extremely long time.After all, what good does it do to come home with a form of money that nobody will accept?We will discuss the evolution of trading currencies from its root to the present time.In addition, trading in gold will be mention as well as the Bretton Woods Agreement.
Gold Exchange and its Interaction with the Bretton Woods Accord:

In 1967 an individual attempted to short the British Pound by taking out a loan from a United States bank.

Instead of in taking out the loan in US dollars he attempted to have it done in British Pound Sterling.The bank did not make the loan due to the wording of the accord called Bretton Woods.

The purpose of the pact was to help stop gambling that a currency would increase or decrease in value.Previous to this, currencies were backed up by a national governments holding of gold as a reserve.This practice provided confidence to the public, since they knew they could exchange there money for gold at any time.

But, it was a very inefficient economically maintaining such large amounts of assets not producing any economic benefit for society.In addition, it limited federal government's ability to expand the money supply and provide an economic stimulus to the country.

This governmental policy had server consequences on a nation's economy causing it to have wild swings between prosperity and recession.This would happen when countries gold reserves would decrease as it imported products that needed to be paid for with gold.Since the currency of a country was backed by the gold it held, as the gold reserves decreased so did the supply of money in the economy.This would have a negative effect on the prices of other commodities such as; corn, oil and sugar.

As these prices dropped other countries would then start buying them in massive amounts which were paid for in gold.Thus the gold reserves would increase and the money supply would follow.The effect on interest rates would be to decrease them and the economy would come out of the depressed period and start performing better.This pattern was continually repeated until World War One began and the trade between decreased due to logistical problems.

Due to the economic might of the United States after World War Two the US dollar increased in value verse the currencies of the European nations.Countries where not permitted to devalue there currencies over ten percent in an attempt to improve there economies through exports.Obviously, many nations have not adhered to this agreement; one only needs to look at China as an example of extreme currency manipulation in an effort to improve exports to the determent of there trading partners.

The Bretton Woods Accord was initiated after World War Two in an attempt to provide order and standardize the international currency markets.The principle reason for this was to maintain the value of a particular currency with in a narrow range, thus bringing a since of balance to the market as the countries could then exchange goods and have advanced knowledge of what value they would receive in return for there goods or services.

In 1971 the United States announced that a US dollar could no longer be exchanged for gold.This process freed up the worlds currency and permitted them to float on a free market and have there value determined by what investors where willing to pay for them.

The amount of funds being traded daily has increased significantly over the decades.From the billions in the 80's to the trillions today.The volume, speed and volatility of the markets has also increased rapidly with improved technology and the popularity of the internet.

The EURO Dollar Market Takes Off Like A Rocket:

This explosion was initially started by the Russians selling oil to the rest of the world and receiving US currency in exchange for there oil.

Since Russia was afraid of a potential conflict with the United States they started depositing there US dollars in banks outside of the control of the US government.When this happened huge amounts of US dollars where now in banks outside of the US.

Because of this the US government enacted laws restricting lending to non US citizens.Then a strange thing happened, US based companies realized there were sizeable amounts of US dollars outside of the US that they could borrow at very favorable rates, in fact they were much more competitive than the interest rates they were presently able to get from a US bank.

In the 1980's British banks began lending US dollars and because of this they have remained the number one market for US dollars outside of the US.In addition, because of there liberal laws and geographical location many countries around the world utilize London as a principle source of financing and Forex exchange.

About the Author

We have researched, tested and reviewed 100's of Forex Training Courses, Software Systems and Brokerage Firms.

We kept the best and eliminated the rest for you to examine at TOP RATED FOREX PRODUCT REVIEWS.

For the internets MOST comprehensive FREE Forex learning tools, which included 100's of FREE training articles and FREE tutorials check out FREE FOREX TRAINING.Good luck on the trading floor today!William R.Alheim, Jr., CPA, MA

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Can Online Currency Trading Make me a Glamorous Movie Star or as Rich as One

Let just make sure we understand ourselves from the very beginning, online currency trading will not make you a movie star.It defiantly could make you as rich as one or richer.But you are never going to get any dates with the starlets costarring with you in any of your movies.

The Forex markets are a place where private investors are entering the markets, learning how to trade Forex and enjoying sensation results if done properly.

The key word is properly, if you are under the impression you can just open a Forex brokerage account tomorrow with having any idea what you doing and like magic the funds are just going to roll into you bank account, I have a little bad news for you, NOT GOING TO HAPPEN!

Now, if you want to take you time, spend a little money and become an expert on the subject then you have a fighting chance.Learn how to trade the currency markets and make money doing it, is not that difficult, but again I am sorry to say you will not be profitable if that is all you do.

First, you have to be a single minded person, who understands that the only reason you are doing this is to make money.You have to be an extremely patient person who controls their emotions that is not distracted by any events around them.

You are a person that does not get caught up in the moment, refuses to play the game and one that avoids the adrenaline rush like a passion.

Don't have a clue what I am talking about, you will later when you sit back and start thinking about where all your money has gone, since you did everything right.Guess what, you did everything right, except one thing and that was you let yourself get caught up in the excitement of trading the FX markets and just had to be in a trade constantly.

You just could not sit there and wait for the big, sure money maker to come along, because that was boring.

Making money in the Forex markets is really not that difficult, what kills most traders are one of two things.The first is they have no patient and just have to trade every second they are in front of their computer.The second is they let margins rule them, instead of ruling margins.

They make a few successful trades and think every trade is a winner and expanded there trading capital using margins because they know what they are doing and never make a bad trade.Well, when the big bad one comes along they are in so far over there heads that it wipes out the last twenty winning trades they had.Greed kills, and absolute greed kills absolutely.

Online currency trading is a skill that can be taught and learned.It is something that anybody can do if they are reasonably intelligent, willing to invest in themselves and posses self discipline.If you feel like your one of those types of people and want to give it a try the rewards can be endless financially.

There really is no ceiling to the amount of money you can make.But, if you are the type of person who easily gets distracted and really is not as patient as they should be, then you might want to find something else to do.

About the Author

We have researched, tested reviewed 100s of Forex Courses, Software Systems and Brokerage Firms which we only list our TOP 10 to help you LEARN FOREX TRADING.

For 100s of FREE FOREX TUTORIALS please visit LEARN CURRENCY TRADING.Good Luck!I look forward to seeing you on the trading floor making money!

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