Everything You Need to Know Before Making a Decision

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Everything You Need to Know Before Making a Decision
There are many things to consider when choosing your next home mortgage. You need to think about your budget, credit score and debt-to-income ratio (DTI), among others. Once you have a good handle on your financial picture, you can begin shopping for the best mortgage deal.

Fixed rate mortgages
When you lock in a fixed interest rate, your monthly payments don’t change, no matter what the market is doing. This is one of the smartest financial moves you can make.

Aside from their introductory low interest rates, adjustable-rate mortgages also offer more flexibility in how you pay off your loan. You can choose a lower monthly payment and increase your cash flow when you need it most. But keep in mind that the introductory interest rates are short-lived, and your payment could go up significantly once your rate adjusts to the next rung on the ladder.

Jumbo mortgages
A jumbo mortgage is a large loan that exceeds Fannie Mae and Freddie Mac lending guidelines. Lenders that offer jumbo loans typically require a bit more paperwork and liquid assets, like retirement accounts, stocks and bonds.

Reverse mortgages
In a nutshell, a reverse mortgage is a type of home loan where you borrow money against your home’s equity. The lender sends you the funds, and you repay them with a series of monthly payments or sporadic withdrawals, until the loan is paid off or your property is sold.

The best part is that most of the money you borrow is tax-free, and the loan doesn’t affect your Social Security or Medicare benefits. The main drawback is that your home’s value will decline as you age.

Choosing the right mortgage for your needs can be a difficult decision, but there are plenty of resources to help you navigate the process. The most important thing is to know your options and weigh your choices.

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