Looking for a mortgage for your Salt Lake City real estate? Whether you're moving or simply investing in Salt Lake real estate, you'll probably need a Salt Lake City mortgage. It's important to know and understand your options in a Salt Lake City mortgage. Of course, professional mortgage advisors can offer you more personalized help than any other information or service.



Fixed Rate

A fixed rate mortgage is the classic home loan. The interest rate is locked in over the course of the loan--hence the name “fixed.” The most popular fixed rate loans are for terms of 15 or 30 years, although other terms are sometimes offered.

Typically, a fixed rate loan is good if you're planning on owning your Salt Lake real estate for a while. Advice on how long “a while” should be ranges from 3 to 7 years at a minimum. A fixed rate is also a stable and attractive alternative when interest rates are low.

Variable or Adjustable Rate

With a variable or adjustable rate mortgage (ARM), the interest rate can change with a specified index, like the New York prime rate. Many ARMs begin with a short, fixed rate period, ranging from 3 to 7 years.

One advantage of an ARM is that is offers a lower initial rate than a fixed rate mortgage. However, that rate can go up after the initial fixed period. If you plan on selling your real estate within that fixed period, an ARM can offer you significant savings.

Renegotiable Rate Mortgage

A few brokers offer a renegotiable rate mortgage. At specific points in the life of the loan (eg every 3 or 5 years), you can renegotiate the rate with your lender. This is especially convenient if interest rates have fallen since the beginning of your loan.

Balloon Mortgage

A balloon mortgage offers you a shortened loan term with lower payments. Typically 5 to 7 years in length, during the term of a balloon mortgage, you make payments that are similar to that of a 30 year mortgage. However, at the end of the term, the balance of the mortgage is due. You have to sell, refinance or convert to a traditional mortgage if you can't pay the balance out of pocket. Again, this can be a good option if you're certain you'll be able to sell your real estate before the term of the loan is up.

Interest-Only

The name of an interest-only mortgage is slightly misleading. It sounds like you only have to pay of the interest, and none of the principal for your real estate. During the loan term, you make payments in the amount of the interest on the loan, which is lower than a fully amortized payment that includes principal. After the first 5 to 10 years, the principal is due. This option can work well for people with income that fluctuates seasonally throughout the year or those who plan to sell the property for significantly more than the purchase price.

Down Payment

The down payment is the amount of money you pay at closing. This amount goes toward the principal on your loan. While you can choose how much to pay in your down payment, until you have paid off 20% of your house's value (with monthly payments, extra prepayments and house value appreciation), you usually have to pay a private mortgage insurance (PMI) fee with each payment.

To avoid this extra monthly cost, you can get a second loan to cover the down payment in conjunction with your mortgage. There are many different ways to do this. One of the most popular is referred to as an 80/20 loan. An 80/20 loan is actually two loans--one for 80% of the home's value, and the other a “piggyback loan” for the 20% down payment. Options vary, but the piggyback loan usually has a higher rate. It may also be an adjustable rate or interest-only loan, like the mortgages described above. Other combinations include an 80-15-5 (80% mortgage, 15% piggyback, 5% cash down payment), 80-10-10 and more. Typically, these monthly payments are still lower than they would be if you had to pay PMI--but always double check.

Your Salt Lake City mortgage can fall into one or many of these categories. With a professional mortgage advisor, you can find the loan that's truly right for your financial situation. A mortgage advisor takes into account your financial situation, income, budget and debt load to help you find a loan that you can afford.