Understanding how to get a seven year fixed rate mortgage is the second step you need to learn once you have decided that it is the best mortgage option for you. There are two ways to get a seven year fixed rate mortgage and both should be considered before making a final decision.
- Consider a 7/1 adjustable rate mortgage. This type of adjustable rate mortgage has a fixed rate for the first seven years. At the beginning of the eighth year, it moves to an adjustable rate mortgage that will adjust up or down each year for the remaining 23 years.
- Consider a seven year balloon mortgage. The balloon mortgage also has a seven year fixed interest rate. At the end of the seventh year, the entire balance is due. The payments for a balloon mortgage are usually based on a 30 year fixed rate amortization schedule.
- Understand the differences between the two types of loans. The 7/1 adjustable rate mortgage is a 30 year mortgage. You are locked into a loan with monthly payments that will pay off the balance in 30 years. The seven year balloon mortgage has monthly payments for the first seven years. At the end of the seventh year, you will either need to come up with the remaining balance, or you will need to refinance the remaining balance into a new mortgage.
- Consult with a mortgage loan officer. A mortgage loan officer will be able to answer specific questions regarding both types of mortgages, and he can provide you with the current interest rates. The details within each type of seven year fixed rate mortgage will help you determine which mortgage is right for you.