It doesn't matter whether you're a first-time homebuyer or an old pro, you are likely to find the entire process of getting a mortgage can be gut wrenching. Making the most of the situation is possible, if you think clearly and examine all the options carefully. One of the biggest things you'll need to consider is what type of mortgage you want. You will find there are two major options: adjustable rate and fixed rate mortgages.
Both adjustable rate and fixed rate mortgages will work to get potential homeowners into a home. Almost every bank, credit union and lending company will offer loan programs that cover both types of mortgages. But, for many homebuyers, the fixed rate mortgage turns out to be the more desirable lending vehicle.
Why is this? A fixed rate mortgage might not offer the flexibility and chances for lower payments than expected that an adjustable rate mortgage does, fixed does provide people with a better sense of stability. There are a number of advantages to the fixed rate mortgage that make it so appealing. They include:
* Rates don't change. A fixed rate mortgage is stable in its very nature. Whatever interest rate is present at the beginning of the loan is present at the end. While this means payments won't go down with interest rate changes, it also means they won't go up. Many homeowners prefer this for budgeting reasons and security.
* Fixed rate mortgages enable homeowners to plan better. Since a homeowner will know exactly what their payments will be no matter what, this type of mortgage takes the "surprises" out of making the bills. This is good for those who don't have an ability to handle higher payments from time to time. It's also a smart idea for those who are having trouble dealing with the little surprises homeownership comes with in and of itself. The ability to plan can also enable a great ability to pay bills on time and improve credit ratings so a better fixed rate mortgage can be obtained down the road.
* Ability to lock in a rate. A fixed rate mortgage obtained at the right time can 'lock in' rates that are more favorable. Those who happen to have good credit and get fixed rate loans at times of lower interest rates will find they might pay a whole lot less over the life of a loan than someone who buys into an adjustable rate loan.
Buying a home is a very big deal. Many who go into homeownership don't realize the kinds of financial surprises that go along with it. To ensure at least one surprise doesn't happen, many borrowers opt to go with fixed rate mortgages. Providing payments that stay the same no matter what happens to the market, a fixed rate mortgage enables planning and can even give a peace of mind that homeowners appreciate.
While a fixed rate mortgage is the choice of many, it isn't the only option. Borrowers should carefully weigh all their options and choose the best one to meet their personal needs and circumstance.
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