When you’re looking for your dream home, it's easy to get wrapped up in the details of the house instead of looking at the big picture. It's important to distinguish between what you need and what you want in order to make a smart purchase. Going into the purchasing process with a clear head will help you save time and money while finding the home that best suits you.
Understanding Fixed-Rate and Adjustable-Rate Mortgage Options
You know what you get with the fixed-rate mortgage. You will lock in an interest rate that will never change during the term of your mortgage. If you’re borrowing during times of low interest rates, this is a valuable perk because you’ll pay less money in interest. Another factor to consider with a fixed-rate mortgage is the term. Thirty years is the most popular option because it offers the lowest monthly payment. However, you’ll pay more for your home over the life of the mortgage compared to a 15-year or 20-year term because you’re paying 10 to 15 additional years of interest.
An adjustable rate mortgage (ARM) offers attractive features for some borrowers. The interest rate for these mortgages will typically be fixed for the first few years and then adjust annually over the remaining life of the loan. In the early stages of the ARM, your initial interest rate will likely be lower than the rates offered on a fixed rate mortgage. Depending on market conditions, the rate on your ARM may increase or decrease after the initial fixed rate period ends. It's uncertain, which is why it's important for you to determine that you can afford larger monthly payments if your mortgage adjusts upward.
Once you define your wants and needs, call or make an appointment to speak with one of our trusted representatives. We’ll discuss your individual situation and help you choose the right mortgage with your best interest at heart so you can move into your home sooner, improve your life and reach your goals.
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