Fixed vs. Adjustable Rate Mortgage: Which is the Best For You
The most reliable fixed-rate and adjustable-rate mortgage lender in Elk Grove, CA, Anew Lending enlists brokers with the expertise and values to ensure their clients get the best service at an affordable cost. Anew Lending prides itself on integrity and has all the information for home buyers wrestling with the notion of a fixed versus an adjustable-rate mortgage.
Anew Lending knows that applying for a mortgage is a significant step that can often lead to confusion. They share their industry knowledge with their clients to help them decide between fixed-rate and adjustable-rate mortgage loans.
What Is a Fixed-rate Mortgage?
A fixed-rate mortgage is a loan that never deviates from the introductory rate. Because the initial rate stays the same throughout the loan repayment period, the buyer’s monthly payment never changes.
Fixed-rate mortgages typically have 15- or 30-year terms.
What Is an Adjustable-rate Mortgage?
Adjustable-rate mortgages are loans where the interest rate changes with the state of the market. With these types of loans, initial interest rates remain for three, five, seven, or ten years, depending on the loan. Afterward, the interest rate changes every six months.
Home buyers who choose adjustable-rate mortgages can expect eventual increases in their monthly payments.
Fixed-rate Mortgage Advantages
Most people choose fixed-rate mortgage loans for their stability. With this type of loan, buyers’ monthly payments never go up, allowing homeowners to budget safely and comfortably.
Fixed-rate mortgages can be more difficult to get. They require higher deposits than adjustable-rate loans and proof of higher credit scores and income. Fixed-rate mortgage payments also start higher than adjustable-rate payments.
Home buyers who plan on living in a house for more than five years benefit most from fixed-rate loans.
Adjustable-rate Mortgage Advantages
It all comes down to time and money in the battle of fixed- versus adjustable-rate mortgages. Adjustable-rate mortgages require a smaller initial payment and begin with lower monthly payments.
However, once the interest rate begins to fluctuate after a few years, the monthly payments can get much higher. It’s paramount for a buyer to look over an adjustable-rate loan agreement thoroughly to make sure they understand how much their monthly payments may increase.
Home buyers who plan on vacating a home after a few years can benefit from the initial low monthly payments of adjustable-rate mortgage loans, then move before the payments rise.
Ultimately, the debate over fixed- versus adjustable-rate mortgages has no definitive answer. One mortgage type will suit one home buyer better than another. Do your research.
Anew Lending is the mortgage lending company working hardest to help home buyers find the kind of loan agreement that suits their needs. Call Anew Lending in Elk Grove, CA, at (916) 226-9991 for any questions and to learn more about available mortgage loan options.
