What Flavor of Mortgage Tastes Best to You?
Pick the mortgage flavor that is most satisfying for you.
Back in 1909 Henry Ford had the corner on the car industry with his vastly popular Model T. He famously stated: “Any customer can have a car painted any color that he wants so long as it is black.” Henry Ford really liked black. His customers? Not so much.
As a result, Ford lost market share to General Motors which was more than happy to paint cars in colors pleasing to the customer. After falling behind in sales, Ford finally changed his mind about allowing customers to choose colors, but he never dominated the car industry again.
Sometimes it’s best to give the customer choices because people need and want different things. The ice cream business gets this. You can get plain vanilla, but you can also get goat-cheese-beet flavor or jalapeno-pineapple flavor. Mortgages should be more like ice cream and less like black Model T’s. Home owners should be able to choose what they need and not be forced to all have the same thing.
Here are six mortgage choices you can find at Zions Bank.
1. Conventional Fixed-Rate Mortgage
What’s wrong with plain vanilla? There is a reason vanilla is so popular. It can be a really good choice. With a conventional fixed-rate mortgage you get a consistent interest rate for the life of the loan. If you rent, you can pretty much count on paying more year to year, but the principal and interest payment on this type of loan stays the same until you pay it off.
2. Home Refinance Loan
Some people don’t like maraschino cherries on their ice cream and some people don’t like paying closing costs or origination fees. If that’s you and you want to refinance or purchase an owner-occupied home, learn more about a home refinance loan.
3. Home Equity Loan
What if you don’t want to go get some new ice cream because you already like the ice cream in your freezer, but want to jazz it up? Maybe you add a banana, or some whipped cream, or some hot fudge. That’s kind of how a home equity loan works. You already own your home or rental property and you want to use your equity to do some extra stuff with it — such as remodel. Why go through the hassle of moving to a new home you like, when you can remodel your current home to the one you like? You have the option of making this a fixed rate loan so you will always know what your payment will be.
4. Home Equity Credit Line
Some people like chocolate mint one day. Another day, they might like cookies and cream. Maybe they will get really adventurous and try bubblegum flavor (or not). It’s just nice to be able to pick something different when you want it. With a home equity credit line, you can use the equity in your home to get what you want, when you want. Get those energy-efficient windows, or upgrade your central air, or pay for a child’s wedding. Take out money when you need it and then pay it back over time.
5. Construction Loan
Do you like building your own ice cream concoction? You can also build your dream home the way you want and finance it with a construction loan. Enjoy a competitive rate on new construction or major remodels. Options include a One-Time Close construction loan with only one closing and a construction conversion loan. Sounds like a treat that won’t leave your tummy churning.
6. Adjustable Rate Mortgage (ARM)
This is your jalapeno-pineapple option. It may taste great, but there is a chance you could get that burning sensation. This is because in the current rising interest rate environment, your monthly payment would go up after the fixed-rate period. But because the average holding time for mortgages is less than five years, intermediate ARMs can be an option because they hold a fixed rate for five to 10 years, and then become adjustable every year thereafter. These loans can start with interest rates that can be lower than a regular 30-year fixed rate, potentially offering more buying power when looking for a home.
Now that you know your options, go pick the mortgage flavor that is most satisfying for you. We all know that ice cream can be really great if it is homemade. The right mortgage can also get you a home made best for you, too.