Even for experienced homeowners, understanding Atlanta mortgages can be tough. Your Atlanta mortgage provider may use confusing jargon that leaves your head spinning. The many types of Atlanta mortgages available today can help you find the perfect financing option for your unique situation, but also add to the confusion.

To help you in understanding Atlanta mortgages, let’s take a brief overview of the common types of Atlanta mortgages available.

Fixed or adjustable rate?

A fixed rate mortgage has an interest rate which will not change over the entire term of the loan. An adjustable rate mortgage, or ARM, has a rate which will remain constant for the first few years then will change based on some economic index. The initial rate on an ARM will be lower than a fixed rate mortgage, making them more alluring in the beginning.

ARMs can be a good choice if you plan to sell or refinance the house either before the rate starts changing or shortly thereafter. When buying a house during a period of high interest, an ARM can give you a better interest rate until you can refinance once interest rates drop. Be careful - a borrower who lacks understanding of an Atlanta mortgage of this type can be surprised once the house payments start to increase.

Interest only mortgages

One of the types of Atlanta mortgages available has payments that cover only the interest and doesn’t pay down the principle. The interest-only payments last for the first few years, and then will increase after that. Recently, these mortgages have become more popular with homeowners who want more money in their pockets each month. This is a false economy, however, as at the end of the interest-only period the homeowner still owes the same amount on the house.

The key to understanding an Atlanta mortgage of this type is the realization that although you are not required to pay on the principle, you are allowed to. For example, you might ask your Atlanta mortgage provider about an interest only mortgage if you have an erratic income. During your low-income months you would pay only the interest, and then pay extra during your more lucrative months to pay down the principle.

80/20 mortgages

Another of the popular types of Atlanta mortgages available is the 80/20 loan. New homebuyers can't always afford to put down a 20% down payment on their home, but don't want to pay the mortgage insurance (PMI) required on homes that carry less than 20% equity. Your Atlanta mortgage provider writes a typical mortgage for 80% of the home’s value and a second mortgage for the remaining 20%. The tax benefits of the second mortgage often offset the higher interest rate.

Talk to an Atlanta mortgage provider

Understanding an Atlanta mortgage is a critical part of a homebuyer's responsibility. Your real estate agent can provide basic information, and an Atlanta mortgage provider can provide details on specific programs to suit your needs.

At Realty1st, we have been helping Georgia residents buy and sell their homes for over 15 years and understand the Alpharetta Georgia real estate market. Our extensive experience with the local area can help you to find the home you want and the loan you need at the price you want to pay. Contact us at 678-221-3333 and let's begin the process of finding and funding your dream home today.