Real Estate

Which Mortgage is best Fixed Rate or Adjustable Rate?

Thu Mar 19, 2009 11:05 am
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In most cases a fixed rate mortgage is the best for a buyer. A fixed mortgage rate will remain the same throughout the term of the mortgage. An example is a six percent rate, your rate will be six percent on day one and still be at six percent at the end of thirty years.

An adjustable rate mortgage may be a good choice depending on the particular terms of the mortgage. If the adjustable rate is 5% and it will remain at the 5% level for three, five or seven years then it may be the right mortgage. This would benefit a family that knew they would be moving within the first few years, say a job transfer.

Buyers need to be aware that some adjustable rate mortgages have special conditions that could create a problem for the buyer in the second or third year if the cost jumped by several hundred dollars per month.

The choice of mortgage needs to be discussed within a family and within the framework of the lender and mortgagor. Realtors may also provide some guidance in these matters.

Buyer's should not sign any documents unless and until they understand all of the terms and conditions set forth.

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