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 adjust over the life of the loan, possibly monthly or yearly, depending on how the mortgage is structured. In the early stages of the ARM, your interest rate will be lower than the lowest rates usually offered on a fixed mortgage. Depending on market conditions, your ARM can increase or decrease. 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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