Best Mortgage Deals

To find the best mortgage deals, you need to be aware of what options are available for home mortgage financing. We began talking about how to determine the best mortgage options here, so let's continue.

Balloon Mortgages:

A balloon mortgage is specifically set up with a low monthly payment that does not repay the entire loan. The final payment, or balloon payment, is a large sum of money that repays a significant portion of the remaining loan principal.

Balloon mortgages are popular, especially in the US, with homeowners who do not intend to stay in their home longer than the term of the mortgage. They would use the proceeds from the sale of their home to make the large lump sum payment at the end of the term and would have enjoyed the lower interest rate that balloon mortgages offer. The disadvantage is that if the homeowner remains in the home beyond the end of the mortgage term, they would have to secure new financing to pay out the lump sum balloon payment.

Jumbo Mortgages or 'Non-Conforming' Mortgages

The Federal National Mortgage Association (known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (known as Freddie Mac) have been authorized by the US Congress to fund mortgages that fall within a conforming limit. The 2007 limit is $417,000; 50% higher in Alaska, Hawaii and the U.S. Virgin Islands.

A loan or mortgage amount that is above the conforming limit is considered a jumbo mortgage.

A jumbo mortgage loan allows you to borrow an amount that is above the conforming limit, but you will pay a higher interest rate.

The Canadian equivalent to the jumbo mortgage is known as a "High Ratio Mortgage". A high ratio mortgage is guaranteed or funded through the Canada Mortgage And Housing Corporation (CMHC).

Now that you have information on the basic types of mortgage loans, you can begin to identify which type are the best mortgage deals for you. You also need to consider repayment methods. There are basically two methods of repayment available to you:

Interest Only Mortgage Repayment

Some traditional mortgages can be arranged with an interest only component for a period of time. Interest only payments are seldom offered for the entire term of the mortgage loan. With this option in place your payments will rise to include paying off a portion of the loan principal after the interest only period ends.

Principal and Interest or Capital & Interest Payments

With most mortgage options, your monthly payments are divided into an interest payment component plus a repayment of the principal or capital. In the first years of your mortgage, most of your payment is interest due with very little applied to principal or capital repayment. Eventually you will reach a point where you will be paying off more of the principal and less interest.

Mortgage Lenders ... An Abundance of Choices!

With so many mortgage lenders and such a wide variety of loan options to choose from, how do you choose the best mortgage deals?

When shopping for a mortgage loan, each lendor you approach will perform a credit check before agreeing to issue you a mortgage. Each credit check and every refusal remains on your credit record. So, whether your credit history is excellent or poor, a reputable mortgage broker can usually shop for the best mortgage deals for you and avoid multiple credit checks.

At LowerMyBills, you can get quotes, compare low rates and save on all your monthly bills. If purchasing property, get the lowest rate on your new home loan. Find your best mortgage deals here.

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