|Mortgage Refinance Information|
How to Compare Fixed Rate Mortgages and Adjustable Rate Mortgages
There are many types of mortgages, and the more you know about them before you start, the better. To compare one Adjustable Rate Mortgage with another or with a fixed-rate mortgage, you need to know about indexes, margins, discounts, caps, negative amortization, and convertibility. You need to consider the maximum amount your monthly payment could increase. Most important, you need to compare what might happen to your mortgage costs with your future ability to pay.
FIXED RATE MORTGAGES
In a fixed-rate mortgage, your interest rate stays the same for the term of the mortgage. The main advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it.
Benefits and Advantages:
- Low rates for the full term of your mortgage
- Security of a fixed monthly payment for the life of you loan, regardless of fluctuations in interest rates
- More stability may give you peace-of-mind
- Higher initial monthly payments compared to those of adjustable rate mortgages
- Less flexibility
ADJUSTABLE RATE MORTGAGE (ARM).
With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed-rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index. Throughout the life of that loan, the principal and interest payment will adjust periodically based on fluctuations in the interest rate.
Benefits and advantages:
- Lower Initial payments due to lower beginning interest rate
- Ability to qualify for a higher loan amount due to lower initial interest rates
- Lower interest payments if the interest rate drops over time
- Interest rate caps limit the maximum interest payment allowed for the loan
- Your future monthly payment is uncertain.
- Initial lower interest rate and monthly payments are temporary and apply to the first adjustment period. Usually, the interest rate will rise after the initial adjustment period.
- Higher interest payments if the interest rate rises over time
A Fixed Rate mortgage will offer you the security of knowing that your mortgage interest rate will not change during the term of your fixed rate. The advantage of an Adjustable Rate Mortgage is that you may be able to afford a more expensive home because your initial interest rate will be lower. A Fixed-Rate Mortgage applies the same interest rate toward monthly loan payments for the life of the loan. Fixed-rate mortgages are more straightforward and easier to understand than ARMs. They are more secure for the buyer and they are very popular with first-time home buyers. Since the risk to the lender is higher, fixed-rate mortgages generally have higher interest rates than ARMs. A fixed rate mortgage is ideal for anyone who likes to budget monthly expenses and plans to keep their home for several years.
A more detailed version of this article including a glossary of terms is available at: http://www.us-banks.org/archives/1970
[Disclaimer: This article is provided for information purposes only. No warranty is either expressed or implied. Under no circumstance will the author be liable for any loss or damage caused by a user's reliance on this information.]
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Is the Inverse Mortgage a Scam? New Program Promises Mortgage Payoff inside of 5 Years
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The power of home equity and interest-only payments, provided from most home equity loans is amazing. You can get a home equity loan, with no closing costs and pay as little as $30.00 to $40.00 per month for up to $10,000 in equity cash. These loans are surprisingly easy to get for both residential and investment real estate.
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Where To Find The Best Rates For Your Mortgage?
As with all of my articles this will be based on a scenario in my home town. (Which may be similar to yours).
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Buying a home or refinancing one is perhaps the largest financial transaction you will ever make in your life, so you want to be sure to avoid any mistakes that may cost you in the long run.
Financial Rebirth Through Remortgage
Seldom in ones life do we get a chance to alter the mistakes we made in the past. Remortgage offers a once in a life time opportunity to change from a mortgage to another that is more desirable.
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Finding the Best Home Improvement Loan Rate
If you're looking for a good home improvement loan rate, you might have to take your time and shop around a little bit.
Sell Your Home and Invest at the Same Time
I continue to see the same For Sale signs in my neighborhood. The houses just aren't selling. If you are considering selling or have a home on the market that is not moving, it's time to think about financing the sale yourself. A good friend of mine bought a new home three months ago, and he has watched his old house sit unsold, while he's struggled paying two mortgages. I finally convinced him to get past his fears and finance the sale of his old home.
Mortgage Free In 15 Years!
Imagine paying your mortgage off in 15 years! Think of all the great things you could do with that extra money. What would you do? Retire early? Buy an R.V.? Travel around the world? If you could eliminate your mortgage in half the time, then your options would be wide open.
What is a Remortgage?
A remortgage is changing your mortgage without moving your home. Remortgaging is the process of switching your mortgage to another lender that is offering a better deal than your current lender thereby saving money. A remortgage can also be used to raise additional finances by releasing equity in your property.
Financing a Home With Bad Credit
Financing a home with bad credit is a common problem for people. Over 25% of homes in the US are financed through sub prime lenders, who offer financing to high-risk borrowers. While sub prime lenders charge higher rates and fees, through comparison shopping you can find a competitive financing offer.
Escrow Accounts, Do You Absolutely Need One?
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Free Home Equity Loan Information
Home equity loan information can sometimes be confusing and misleading. I have written this article to properly explain home equity loans. Basically equity is the difference between your home's appraised -- or fair market value and the outstanding mortgage balance you owe on your home. Borrowing against the equity built up in a home has become extremely popular.
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