There are many options to choose from for your New Mexico Mortgage. Not every type of New Mexico Mortgage is right for every financial situation. In fact, choosing the wrong type of New Mexico Mortgage is a costly mistake you need to avoid. Here are several tips to help you choose the right New Mexico Mortgage for your financial situation.

New Mexico Mortgage loans fall into three basic categories depending on the type of interest rate. The degree of financial risk for each type of New Mexico Mortgage is also based on the interest rate. Here is an overview of the basic types of New Mexico Mortgage loans available.

New Mexico Mortgage: Fixed Interest Rates

New Mexico Mortgage loans with fixed interest rates are the most well known variety. In fact, your parents most likely had a traditional, 15 or 30 year, fixed interest rate mortgage loan. New Mexico Mortgages with fixed interest rates have the lowest amount of risk for the borrower. Fixed interest rate New Mexico Mortgage loans come with slightly higher rates than other types; however, the degree of security of being able to plan your budget around a predictable mortgage payment justifies the higher cost for many New Mexico Mortgage holders.

New Mexico Mortgages: Adjustable Interest Rate Mortgages

New Mexico Mortgages with adjustable interest rates have become extremely popular due to their easy qualifying requirements and low monthly payments. There are several different varieties of New Mexico Mortgages with adjustable interest rates all with varying degrees of risk. It is important that you fully understand what you are getting yourself into before choosing an interest only or ultra-risky option loan for your New Mexico Mortgage.

The concept of adjustable interest rates is fairly straightforward. Your New Mexico Mortgage comes with an introductory interest rate that is significantly lower than the actual rate. New Mexico Mortgage lenders use introductory interest rates to attract borrowers; however, when the introductory period ends the New Mexico Mortgage lender will reset your loan to the actual interest rate and the payment amount will go up.

In addition to the initial adjustment of your mortgage, the New Mexico Mortgage lender will adjust the interest rate at regular intervals, commonly each year, as specified in your loan contract. Your adjustable rate New Mexico Mortgage is tied to some financial index, such as the prime rate. When the lender adjusts your loan they will use the prevailing rate plus lender markup to set your new payment amount. When interest rates are rising as they have been in recent years, you can expect the payments on your New Mexico Mortgage to go up as well.

New Mexico Mortgage: Hybrid Mortgage Loans

Hybrid mortgage loans offer the best of both New Mexico Mortgage types. Choosing a hybrid mortgage allows you a lower fixed interest rate for a period of time, often five years. At the end of the fixed interest rate period, the lender will convert your New Mexico Mortgage to an Adjustable Rate Mortgage loan. Hybrid mortgages are especially useful for New Mexico Mortgage holders that only plan on keeping their homes for a few years.

You can learn more about your New Mexico Mortgage options, including costly mistakes to avoid by registering for a free mortgage guidebook.