Homeownership can be a great experience if you approach it the right way. One easy step you can take to make sure you protecting yourself is get a fixed rate loan. A loan that is fixed for the entire length of the loan. Here are few reasons I feel are some of the major benefits to a fixed rate mortgage.
Security: With an unpredictable economy and job stability questionable it is time to play it safe if you havent been already. Home prices are falling and if you are in an adjustable rate loan that your fixed term is about to end now is the time to act. Your mortgage is one of your largest financial obligations and will be so taking steps to ensure your financing is safe and your loan will not change on you or put you into a situation that will leave you helpless is the right move.
Cheap money: If you are not in a fixed rate mortgage right now you should be for all the reasons I am providing today but given the current cost of borrowing money, even if you overlook all my other advice, you should look at the current interest rates right now to see if there is a benefit for you to get yourself into a better loan.
Protection Against Market Swings: Even if your plan is to stay in the house for 5 years when you get your loan by getting something fixed that you can afford you have a built in safety net if things change 4 or 5 years later and you need to keep you current loan. We all hope that we have the foresight to see the trends in the real estate market but sometimes things happen that are out of our control so it is better to just be safe from the beginning.
Paying Off Your Mortgage Balance: Remember the days when people actually paid off their loans?!? The way they did was by getting an affordable fixed rate loan on a mortgage amount that was in their comfort zone and holding on to the loan until they paid it off. I have said this before but I feel compelled to reminder people; mortgage interest is frontloaded. This simply means that the mortgage lender piles the majority of the interest on your loan onto the first few years of your payment. Interest is NOT spread out evenly over the life of the loan. Here is a simple example. If you have a $2000 mortgage payment in your 1st payment about $1980 dollars will be applied towards interest. On your last payment $1980 will be applied towards your principal balance. The moral of the story is to get into a fixed loan so you only pay the first few years of interest heavy payments once. If you keep getting short term ARMs and refinancing you are starting all over every time you do that.
Mortgages are a big investment. You may have a circumstance where an adjustable rate mortgage makes sense for you. Overall, fixed rate loans are safe for everyone.
Good luck with your home financing! - 15224
Security: With an unpredictable economy and job stability questionable it is time to play it safe if you havent been already. Home prices are falling and if you are in an adjustable rate loan that your fixed term is about to end now is the time to act. Your mortgage is one of your largest financial obligations and will be so taking steps to ensure your financing is safe and your loan will not change on you or put you into a situation that will leave you helpless is the right move.
Cheap money: If you are not in a fixed rate mortgage right now you should be for all the reasons I am providing today but given the current cost of borrowing money, even if you overlook all my other advice, you should look at the current interest rates right now to see if there is a benefit for you to get yourself into a better loan.
Protection Against Market Swings: Even if your plan is to stay in the house for 5 years when you get your loan by getting something fixed that you can afford you have a built in safety net if things change 4 or 5 years later and you need to keep you current loan. We all hope that we have the foresight to see the trends in the real estate market but sometimes things happen that are out of our control so it is better to just be safe from the beginning.
Paying Off Your Mortgage Balance: Remember the days when people actually paid off their loans?!? The way they did was by getting an affordable fixed rate loan on a mortgage amount that was in their comfort zone and holding on to the loan until they paid it off. I have said this before but I feel compelled to reminder people; mortgage interest is frontloaded. This simply means that the mortgage lender piles the majority of the interest on your loan onto the first few years of your payment. Interest is NOT spread out evenly over the life of the loan. Here is a simple example. If you have a $2000 mortgage payment in your 1st payment about $1980 dollars will be applied towards interest. On your last payment $1980 will be applied towards your principal balance. The moral of the story is to get into a fixed loan so you only pay the first few years of interest heavy payments once. If you keep getting short term ARMs and refinancing you are starting all over every time you do that.
Mortgages are a big investment. You may have a circumstance where an adjustable rate mortgage makes sense for you. Overall, fixed rate loans are safe for everyone.
Good luck with your home financing! - 15224
About the Author:
The Mortgage Wizard writes informative articles about the mortgage industry to give you tips on financing. Check out some mortgage companies to find out about today's fixed rate mortgages.
