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New mortgage loan products offer a more complex selection of terms. Lenders now offer mortgages that are blends of short-term ARMs and 30-year fixed-rate loans with a lower fixed-rate of interest for a period of five, seven or ten years. Be sure that you understand what happens at the end of the initial term before you sign on the dotted line for such a loan.

Many of these loans revert to a 1-year adjustable rate loan at the end of the initial term and can be adjusted once a year based on an index tied to the cost of money. You should know how much over the index your rate will be set and the limit or cap on how much your payments can increase. A "balloon" note requires the entire balance to be paid to the lender after the initial period of the loan ends. Most of these loans require the lender to guarantee to refinance the note at that point if payments have been timely. The lender should spell out how the re-finance rate will be determined and what costs will be involved. These loans can help you buy a more expensive house than you could afford with a 30-year fixed rate mortgage, but be sure that you understand the terms and the potential risks.

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Mike Hornby
ReMax Real Estate Central
206 2411 4th St. NW
Calgary, Alberta, T2M 2Z8
Cell: 403-870-8009
Fax: 403-284-4923
mikehornby@NUMBER1EXPERT.com

Mike has been selling in Calgary, Bearspaw, Springbank, MD of Rocky View, Elbow Valley Estates, Heritage Pointe, MD of Foothills areas for over a decade. He has helped hundreds of clients purchase and sell their homes, through his efforts Mike has recieved many Re/max awards, including induction into the Re/max Hall of Fame and Platinum Club status. Contact Mike today! 403-870-8009