When it comes time to get a mortgage to buy a home, you can choose between a fixed interest rate or an adjustable interest rate. Both types have their advantages and benefits, so you need to take the time to consider which will be best for you now and in the future. To help you with that decision, here is some information about fixed-rate home mortgages.
In general, a fixed-rate mortgage will have a higher interest rate than one with an adjustable. However, the rate you are given at the signing of the loan is what you will be paying for the entire term, and you will never have to worry about it increasing to an amount you will not be able to pay each month. The only thing that can cause your monthly payments to change is an increase in the taxes or insurance, and these are often added to your loan payments.
When you know the exact amount you are paying toward interest and principle every month, it is a simple matter to determine how much you owe. When you know the principle, you can then figure the amortization if you pay a bit more each month or make a lump sum payment. This can significantly decrease the term of the loan and the total amount you will end up paying for the property.
A fixed-rate mortgage can have a 30-year term so each payment is smaller than it would be for a 15- or 20-year loan. This allows you to buy a more expensive and larger home for the same payments. Of course, it is important to keep in mind that you will end up paying a considerable amount of interest on the longer loan causing the total cost of the house to be much higher as well.
Contact a mortgage company to find out what kind of fixed rate you qualify for before making your final decision. Your credit score, the amount of money you have for a down payment, the amount of the loan, and how long of a term you take will all determine the rate you are given. If this seems to be a bit higher than what you want, ask what can be done to lower that. However, if you still feel the interest rate is too high, you should then ask about adjustable rates. Then, look over all the numbers and decide which will be better for you and your family.Share
21 August 2018
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