Choosing a Loan Los Angeles CA

Are you buying your first home? Maybe you're planning to retire soon, buying a second home or planning on an owner occupied investment property. Real estate loans are not one-size-fits-all. How do you find the right loan?

As with all major expenditures you should first assess your life situation both for the present and for possible future life changes. Are the kids just starting school, leaving for college, do you foresee a job transfer? How much of a down payment can you make, do you want the security of a fixed rate payment, what about cash flow?

1. A fixed rate loan can provide you the security of an unchanging fully amortized payment. The typical term of the loan is 30 years. This type of loan usually works out best for those who plan to stay in their home for the long-term.

   There are variations to the 30 year loan. A 15 year payment term allows you to pay less interest for the life of the loan, you could save hundreds of thousands of dollars in interest paid over the life of the loan, but you will be making larger payments.

   If you're not comfortable with larger payments you can still save money paid in interest over the term of the loan and shorten the life of the loan by several years. Simply divide your monthly payment by 12 and add that amount to each monthly payment making 13 payments instead of 12 for the year.

   Choosing a 40 year term will give you a smaller monthly payment but you will also build equity more slowly and pay more in interest during the loan's term.

   A multi-year fixed rate loan with a balloon payment offers lower payments and usually has lower closing costs. You will definitely want to refinance the loan prior to the balloon payment due date though!

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Author: Lynnette Phillips