Welcome to Easy Mortgage Online Guide
Mortgage Rates Home Loans Article
This is a selection made from among articles on Mortgage Rates Home Loans. For a permanent link to this article, or to bookmark it for future reading, click here.
How to Compare Fixed Rate Mortgages and Adjustable Rate Mortgages
from: Chileshe MwapeThere 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
Disadvantages
- 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
Disadvantages
- 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
SUMMARY
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.]
About the Author
Copyright © 2005. Chileshe Mwape writes for The US Banks Guide: http://www.us-banks.org/. Find informative articles and news stories about banking and finance. [This article may be reprinted as long as all the above links are active and clickable.]
 |
 |
Warning: file(http://www.searchfeed.com/rd/feed/TextFeed.jsp?trackID=J4200085324&pID=67483&cat=mortgage+rates+home+loans&nl=5&page=1&excID=) [function.file]: failed to open stream: HTTP request failed! HTTP/1.1 404 Not Found
in /home/quies/public_html/mortgage/datas/searchfeed.php on line 8
Mortgage Rates Home Loans Specific links
Mortgage Rates Home Loans News
Mortgage Rates New Record Low Attracts Attention From Consumers According To BurlingtonMortgage.biz
Mortgage Rates New Record Low Attracts Attention From Consumers According To BurlingtonMortgage.biz Home mortgage rates have set yet another record, dropping to new lows for 30 year fixed, 15 year fixed, and 5 year ARM home loans, according to mortgage rate research website, BurlingtonMortgage.biz. "Around the holidays refinancing or buying a home just isn't on most people's radars" explains Nat ...
Read more...China Limits Mortgage Loans for Foreigners, NDRC Says
China will limit mortgage loans for home purchases by foreigners to stem overseas investment in its property market as part of efforts to cool prices.
Read more...Mortgage rates for 30-year loans hit record low
Rates for 30-year U.S. mortgages declined to the lowest level on record after the Obama administration announced measures to make it easier for homeowners to reduce their monthly payments by refinancing. The average...
Read more...TexasLending.com to Discuss Qualifying Consumers for Home Loans and Low Mortgage Rates on Radio KLIF in Dallas
CEO and president of TexasLending.com, Kevin Miller, and his co-hosts will discuss qualifying consumers for home loans and how mortgage rates had potential to meet their all-time lows on The TexasLending.com Mortgage Hour weekend radio show on KLIF AM radio in Dallas.(PRWEB) January 28, 2012 Kevin Miller, CEO and president of TexasLending. ...
Read more...Loans.org: Mortgage Rates Hit Low but Industrial Numbers Should Raise Red Flag
Despite mortgage loan rates hitting record lows for the eighth time in a year, slow industrial construction fails to meet market forecasts—telling of a continuously poor job market, according to Loans.org.Los Angeles, CA (PRWEB) January 24, 2012 Freddie Mac reported that the average 30-year fixed home loan interest rate fell to a new record low on Thursday, settling at 3.88 percent. However ...
Read more...