Home Buying Questions - Part 3
How to Buy A home - Home Financing Questions - Part 1
What is a Fixed Rate Mortgage vs. an Adjustable Rate? or maybe “What will my rate be?” Or “What am I paying when I pay my mortgage payment?” or how about “What’s PMI and will my monthly payments change during the loan term?
Hi, I am Jeff Chubb with the Chubb Realty Group and today I am answering those questions!
- So “What is the difference between a Fixed Rate and an Adjustable Rate?
For a fixed rate mortgage, the interest will stay the same throughout the life of the loan. The most common fixed rate mortgages are 15 and 30 year notes. An adjustable Rate Mortgage, otherwise known as an ARM means that the interest rate can change periodically. This means that the monthly payments can go up or down. Generally the initial interest rate is lower than of a comparable fixed-rate mortgage which is called the teaser rate. After that period ends, interest rates-and your monthly payments can go higher or lower.
Your expected utilization of a property will ultimately help drive this decision. I will however note that interest rates are at historical lows and the only real place for them to go… Is well UP.
- So “What is my interest rate going to be?”
That is a tough question to answer depending how far out you are from the actual buying process. The farther out you are, the bigger the guess! When you are getting pre-approved, you do not want to worry about a bank’s interest rates. Banks rates vary daily and a bank may be competitive one day and less competitive the other.
When you have found a home and gone under agreement on that home, then...