How To Choose Between A Fixed Rate Mortgage And A Variable Rate Mortgage

How to​ Choose Between a​ Fixed Rate Mortgage And a​ Variable Rate Mortgage
Whether you​ are trying to​ mortgage your home or​ trying to​ buy a​ home you​ must know in​ the​ market today two common mortgages rates prevail .​
The two most common rates are known as​ a​ Fixed Rate Mortgage and the​ Variable Rate Mortgage.
As the​ name suggest,​ the​ fixed rate mortgage contracts you​ for specified interest rate over a​ specific period of​ time .​
This period of​ time is​ refereed to​ as​ a​ mortgage term .​
a​ mortgage can range anywhere from a​ six months loan to​ 30 years.
Though the​ variable rate mortgage may have payment terms that are fixed,​ the​ interest rates can change .​
The moves in​ the​ market prevail in​ determining interest rates .​
You technically pay a​ fixed payment every month .​
What the​ variable rate mortgage is​ does is​ distributes what you​ pay in​ interest and what goes towards your premium depending on​ the​ current interest rate .​
If the​ interest raises your payment toward the​ principle decreases and the​ payment toward the​ interest increase .​
The reverse is​ true if​ interest rates decrease.
Which type of​ mortgage is​ right for your depends on​ your ability to​ handle the​ interest fluctuations .​
a​ fixed rate mortgage is​ a​ better fit for you​ if​ you​ like the​ stability of​ a​ fixed payment over a​ predetermined period of​ time.
You can apply for any term mortgage you​ feel you​ want,​ for example,​ a​ five year fixed table can be created for you​ with a​ fixed rate mortgage .​
This means that for five years you​ will repay the​ loan with a​ fixed interest rate table.
Some borrowers prefer to​ take a​ chance with the​ variable interest rate mortgage .​
The variable rate is​ for you​ if​ you​ feel that the​ amount you​ applied for can be repaid more quickly at​ a​ much lower interest rate .​
With this type of​ mortgage there is​ a​ possibility that the​ interest rate will lower during the​ term of​ the​ loan allowing you​ to​ pay down your premium more quickly.
Because of​ their expertise to​ predict the​ trends of​ the​ current economic conditions,​ financial experts are probably better of​ with a​ variable rate mortgage .​
They would certainly benefit even more from a​ variable rate mortgage if​ they can accurately predict the​ trends for the​ next couple of​ years.
While trying to​ decide on​ which of​ these two mortgage rates fits your comfort level,​ analyzed your analytic skills and financial abilities .​
Variable rates are not proven to​ be as​ stable as​ the​ fixed rate .​
If you​ want consistency,​ the​ fixed rate is​ for you.
There are some risk attached to​ the​ variable rate but it​ does have its rewards .​
Can you​ handle the​ risk-reward payoff? If so,​ then the​ variable rate is​ probably the​ route for you.
How To Choose Between A Fixed Rate Mortgage And A Variable Rate Mortgage How To Choose Between A Fixed Rate Mortgage And A Variable Rate Mortgage Reviewed by Henda Yesti on July 01, 2018 Rating: 5

No comments:

Powered by Blogger.