| When it comes to the various options that you can | | | | This type of mortgage is good for someone who |
| get for buying your house, a two-step mortgage | | | | may be thinking of moving prior to the time that the |
| may be just the thing you need. Being that it is kind | | | | mortgage rates are changed. If they are not certain |
| of a cross between both a fixed rate mortgage and | | | | that they will stay at that location then this would be |
| an adjustable rate, it may provide just the option you | | | | a good way to go. Another possibility is that a |
| want in a time of financial uncertainty. Here are some | | | | two-step mortgage would allow someone with a |
| things you need to know about second step | | | | lower income to get a larger house. This could work |
| mortgages. | | | | quite well especially if they are quite sure that their |
| A two-step mortgage, like its name implies has two | | | | income will be improved over the next few years. |
| different parts to it. Often called a hybrid loan, it | | | | The main advantage of this type of mortgage, as |
| combines some of the features of both types into a | | | | with any adjustable rate mortgage, is the possibility |
| typical 30-year mortgage. The first part of the | | | | of a large amount of savings if the market stays |
| mortgage, which is usually either 5 or 7 years, has a | | | | relatively good. Of course, this is really unpredictable, |
| fixed rate so that the interest and payment stay the | | | | but it could serve as a good way to go. On the |
| same. This part of the loan is typically lower than the | | | | other hand, you may be forced to sell if the market |
| market value giving the buyer some savings during | | | | does turn bad. |
| this time. | | | | When you look for a mortgage, whether it be a |
| At the end of the first period, an adjustment will | | | | two-step mortgage or any other kind, be sure to |
| take place, which will determine what the payments | | | | compare it with several offers. This way, you can |
| will be for the remainder of the 30 years. Since a | | | | see what others are offering and have something to |
| two-step mortgage is typically more of an adjustable | | | | compare your offer with. Be sure to separate the |
| rate mortgage, at least at this time, the adjustable | | | | interest and principal from the various fees that will |
| rates will now kick in. Generally, and this is something | | | | be applied. You want to compare the fees with the |
| you want to make sure is in the terms, there is a | | | | fees on other offers especially, because this is where |
| limit placed on how much of a percentage the | | | | any extras that there are will be added. It is a good |
| interest can be raised - if the market calls for a raise. | | | | idea to know the terms that apply to the various |
| After this initial raise, the interest rate is adjusted | | | | fees - some are really unnecessary, but you need to |
| yearly - according to the market. | | | | be able to tell the difference. |