So which is better fixed rate or adjustable rate mortgage?Written by Syd Johnson
This is a question that keeps coming up when customers start looking at purchasing or refinancing their home. If you look at average 30 or 15 year mortgage, it seems that better mortgage depends on type of customer.The best mortgage is one that fits in your long term budget, won’t use up too much of your monthly income, and gives you a sense of control over your home so you don’t end up house rich and cash poor. Let’s look at basics. Fixed rate gives you stable interest rate and predictable payments A fixed rate mortgage gives you sense of control because you know what your interest rate will be for next 30 years. The only concern is that market rate might go down at some point in future and you will end up paying more than current interest rate. You can change this by refinancing loan to lower your payments and get a lower interest rate. Adjustable gives you ability to change up or down with market index An adjustable rate mortgage allows you to play with market rate knowing that sometimes you will be more than market interest rate, and other times you will be paying slightly less. Overall, if economy stays healthy you should feel like you made best decision and did not overpay for your home.
| | Low mortgage rates are spurring the recent boom in home ownershipWritten by Syd Johnson
Anyone serious about buying a home has seen recent ads offering low mortgage rates for first time buyers and current homeowners. One reason for this mass of offers is that most financial institutions now understand economic importance of having home owners as a part of their clientele.The advertising for low mortgage rates is specifically designed to bring in customers who never thought that they could qualify for a home loan. Who are these customers in demand? Lenders are going after non traditional borrowers First time buyers, single buyers, minorities, women and other groups that might have been shut out of home ownership market in past. If you’re a member of one of these groups you might have received mailings, phone calls, or seminar invitations to give you more information on how to get your own home, and how to do so with low mortgage rates.
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