 |
|
|
|
Information on mortgages, home equity loans, and consumer credit to help you use the power of financing to your advantage.
|
|
|
|
|
Untitled Page
|
|
|
|
|
|
|
Mortgages > Purchase
Choosing between an adjustable and fixed rate mortgage
Most homeowners, looking for long term financial security, are inclined to lock into a fixed mortgage rate, which remains the same over the life of a mortgage. But is that always the wisest choice? Sometimes, an adjustable-rate mortgage, which changes interest rates down the road depending on fluctuations in the prime rate, can be a wiser choice. When making your decision, consider some of these factors:
• How long do you plan to live in your home? Some buyers have a fairly precise idea of how long they intend to remain in the home they are purchasing, whether it be related to job mobility or upward mobility. If you plan to be in your home less than five years, an adjustable-rate mortgage (ARM) can be particularly attractive, especially because some ARMs now allow you to lock in maximum rate increases for up to five years at a time.
• How low are current mortgage rates? If you plan to keep your home for the next 30 years and you are able to lock in at a 6 percent rate, the security and comfort of knowing exactly what your payments will be over the life of the loan often outweigh the short term financial benefits of an adjustable rate.
• While ARMs averaged 0.5 percent to 1.2 percent lower than fixed rate mortgages during the last 10 years, and still start off at interest rates lower than fixed rate mortgages, past performance is not necessarily an indication of what the next 10 years may bring.
• Because ARM rates are lower than fixed rates, monthly payments start out lower as well, which means you may be able to qualify for a higher mortgage than you would with a fixed rate.
• You can always refinance to a fixed rate mortgage, although, it’s impossible to know whether fixed rate mortgages will ever again fall as low as they have in the last couple of years. Refinancing costs should also be a consideration.
• Apply now for a home loan!
The tips on this website should be considered food for thought only. Lendingtips.com is a clearinghouse of ideas, not a professional adviser. Before any important decision, please consult the appropriate professionals (lawyer, accountant, real estate agency, broker etc.).
|
|
|
|
|
 |
• Mortgages > Purchase Articles Archive
• Mortgage Loan Calculator Use this calculator to determine your monthly payment and amortization schedule.
• Mortgage Qualifier Can you buy your dream home? Find out just how much you can afford!.
• Refinance Breakeven Should you refinance your mortgage? Use this calculator to determine when you will breakeven!
• Rent vs. Buy Are you better off buying your home, or should you continue to rent?.
• Amortizing Loan Calculator Enter your desired payment - and let us calculate your loan amount. Or, enter in the loan amount and we will calculate your monthly payment!
• ARM vs. Fixed Rate Mortgage Use this calculator to compare a fixed rate mortgage to two types of ARMs, a Fully Amortizing ARM and an Interest Only ARM.
|
|
|
|
| ©2005 Lendingtips.com All rights reserved. |
|
|
Lendingtips.com 464 Oak Avenue Naples, FL 34108
Phone (239)877-7835 Fax (239)594-5686
|
|
|
|
|
