Pittsfield, MA -- (SBWire) -- 07/17/2013 --Sometimes trying to decide whether you should choose a fixed interest rate mortgage can be a challenge. You need to weigh the advantages of a fixed rate with an adjustable rate, a process that can sometimes feel like you are choosing “the luck of the draw” so to speak. It’s sometimes difficult to know which decision is really the right one at any given moment. The decision you make must be cost-effective, and that can sometimes be the challenge with which you are faced.
We are presently in the second decade of the 21st century, and according to research performed by Real-Estate-Yogi.com; adjustable rate mortgages have been cheaper than fixed rate mortgage interest rates fifty-two percent of the time. The research was based on a three year ARM and a 30 year $300,000 mortgage. The percentage shows the two types of mortgages are running pretty close to even.
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In October 2005 a fixed mortgage interest rate would have saved a homeowner fifteen percent or approximately $12,200 compared to a three year ARMS However, in September 1991 a buyer would have paid thirty percent or $29,800 more with a fixed rate mortgage over the same three year period.
Experts are divided in their opinions about what the interest rates will do next. It can be difficult to predict when there are so many banks moving on rates that are not in cycle with the RBA. What options does this leave a borrower?
Fixed rate mortgage interest loans provide consistency to the borrower because he knows if he can afford the payments now, he can afford it next year as long as the financial circumstances remain the same. This feeling of security is what appeals to many borrowers of fixed rate mortgages because there is no fluctuation in the interest rate no matter what the market does.
On the other hand it can be frustrating if you lock in a fixed rate and then variable rates decline because getting out of a fixed rate mortgage can be quite expensive. Most borrowers in this situation remain with the adjustable rate mortgage which allows flexibility and allows them to make extra monthly payments.
It can be difficult for a borrower to choose between adjustable rate and fixed rate mortgage loans, but there are other ways for the homeowner to get ahead. Most borrowers are anxious to pay their mortgages down faster in order to achieve financial freedom, but some lenders do not allow additional payments or only allow extra payments in specific increments. It’s important to check with your lender before you make any additional payments. Even a small extra $50 a month payment on a $300,000 loan can save the borrower $29,210 in interest and reduce the term of the loan by just over two years.
You can also reduce the overall cost by comparing home loans and switching to a lower interest rate than the one you are currently paying. Certainly the interest rate is not the only consideration; you have to account for fees and charges as well as other “fringe benefits” such as whether the lender allows borrowers to make extra payments on the loan. Our company can work with you and help you make the decision that is right for you.
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Fixed Rate Mortgage Interest Rates Declines, Get Benefited with Fixed Interest Rate Mortgage Refinancing
Making the choice between a fixed and adjustable rate mortgage can present challenges. The home buyer must research the fixed rate mortgage interest and compare it to the ARM rate in order to determine which option is best for him as an individual buyer.