Creative Wedding Ideas - There are no Dumb Mortgage Questions

(ARA) - The old saying, "The only dumb question is the one you don't ask" couldn't be more true when it relates to your mortgage. The more you ask, the more you know. And the more you know, the better decisions you'll make when getting a mortgage.

Know Your Mortgage Options and Know Them Well

When you shop for a mortgage, the difference between being well informed and barely understanding your choices can be costly. For example, settling for a 30-year fixed-rate mortgage when you should have gotten a lower rate with an Adjustable Rate Mortgage (ARM) can cost you several hundred dollars a month, on average, or several thousand over the life of your loan.

Or, conversely, getting an ARM when you should have gotten a fixed-rate mortgage can cause problems down the road when your rate adjusts or you need to refinance. Knowing which mortgage is best for your situation can save you headaches and pocket-book shock.

So, when you are ready to talk with a mortgage professional to figure out the best loan for your situation, have some information ready. This will help your banker or broker find you the absolute best mortgage.

According to the experts at Quicken Loans, some common questions you should ask yourself are:

* How long do you plan on staying in your home?
* Do you think your income will grow substantially in the next three to seven years?
* Do you plan on starting (or growing) your family in the next three to seven years?
* Do you put money in a 401k or other long-term investment?
* Are property values rising or declining in your area?
* In order to pay a lot less interest down the road, can you afford a slightly higher payment with a 15-year or 20-year mortgage versus a typical 30-year mortgage?

You might be wondering, "Why does it matter how long I plan on staying in my house?" or, "Why does it matter if property values are rising in my area?" Here's why. If you know for a fact that you are only planning on staying in your home for seven years or less, you can almost always get a lower rate and lower payment (and therefore save money) with an ARM over a fixed rate.

Or, if you unfortunately live in an area with declining property values, you might want to stick to the security of a 30-year fixed, or even consider a 15-year fixed rate to pay down as much principal as possible. That way, when the housing market rebounds and prices rise again (which will happen if history is any indicator), you have equity built into your home and you can sell for a nice profit. On the other hand, if you are lucky enough to live in an area with rising values, your equity grows by itself and you don't need to worry about paying off principal.

"When I bought my first house in Detroit, I knew I wouldn't stay there more than five years. There was no question. It was a starter home and not in the greatest neighborhood. Once my wife and I had children and our income increased, we moved," says Ian Dow, from Livonia, Mich. "Unfortunately, my mortgage broker never even brought up an ARM in our discussions. I wish I knew then what I know now. I could have saved thousands."

Dow says he could have benefited from an ARM in the couple's second home as well. "I could have used the cash I put in equity into another investment with a higher return than my mortgage rate, but it never came up. I didn't even really know what ARMs and interest-only mortgages were back then," he says.

To ensure you get the best mortgage for your situation, always ask questions, get answers, ask more questions, and then make your decision. If you think you'll be moving or refinancing in the next few years, consider an ARM. If you know you won't be moving or refinancing, consider a 30-year or a 15-year fixed.

Whatever your choice, with the right information, you'll make the best decision and save yourself the most money in the long run. Isn't saving a lot of money worth asking a few questions?

To stop wondering how to lower your mortgage payment and talk to an expert today, visit www.QuickenLoans.com.

Copyright © 2008, ARAnet, Inc.