Today's Mortgage Rates

You’ll likely face many major decisions to make when you’re ready to take the homeownership plunge, not the least of which is choosing the right kind of mortgage for your needs. Mortgage options used to be fairly limited, but in recent years new varieties have abounded.

Here are some of the more common types:

Fixed-rate mortgage. You make the same monthly payment throughout the term of your loan, usually 15, 30 or even 40 years. Shorter-term mortgages offer lower interest rates but higher monthly payments, so you may not be able to afford as expensive a house. However, over the life of the loan you’ll pay thousands of dollars less in interest – and, you’ll build equity in your home much more quickly.

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As many homeowners dip into their home equity, a small but growing number are doing the opposite – paying off their mortgages quicker than lenders require.

But is ending a mortgage sooner than necessary a wise move? There’s no simple answer. Financial advisers disagree sharply about whether, and when, such an approach makes sense.

“I talk with clients about this every day, probably five, six times a day,” said Jonathan Satovsky, an investment adviser in Manhattan with Ameriprise Financial, a financial management company based in Minneapolis. Satovsky generally warns his clients against prepaying.

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The recent trouble in the sub-prime mortgage industry has made many people take pause. So it begs the question: what should you do if you’re a first-time home buyer and have bruised credit? Is a mortgage even possible?

If you have less-than-perfect credit, don’t think you’re excluded from getting a mortgage–it still may be available to you. Lenders use four different factors to qualify you for a loan–credit is just one. The others include your assets, how much income you make and the property you’re looking to finance. If you’re weaker on one factor, you may be able to compensate by being stronger on other factors. For instance, if your credit score isn’t quite high enough to qualify you for a particular loan, you may still qualify if you have, say, lots of assets or make a good enough income to prove to lenders that you can handle paying back your loan.

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