Preparing your mortgage payments is a big deal; after all, it can take 30 years or more to pay. One of the biggest decisions regarding it is whether your mortgage will have a fixed interest rate or a variable interest rate. A fixed-rate locks you into an exact percentage for your monthly payments based on the current market rate; a variable rate changes periodically according to the market. Fixed vs. variable rate: which is better for you?
One of the nicest attributes of fixed-rate mortgages is the stability. There is no question what you will have to pay every month. There is no risk of having to pay more over time, especially in a time of instability and inflation.
Your lender can calculate how much you would pay per month depending on if you have a 30, 20, or 10-year loan. Your income, credit score, and down payment will determine what you can afford and what kind of mortgage rate works best for you. Additionally, it is possible that you could negotiate for a lower interest rate later on if it falls drastically.
Hybrid Adjustable-Rate Mortgages
On the other hand, the most popular form of adjustable-rate mortgages, also known as ARMs, is the hybrid model. You can have a fixed rate for the first few years, followed by an adjustment based on the market periodically. Standard options include 5/6, 3/1, 7/1, and 10/1. To interpret, 5/6 means that you pay a fixed rate the first five years, followed by an ARM that is adjusted every six months.
Adjustable-rate mortgages put you on the adjusting path from the start. It is wise to go with this method if you are confident about the following:
That you will get a raise
That the market rate will drop
That you will sell or refinance before the interest rate rises
Ameri-Star Homes was built on the idea that a home is not complete until the homeowner is 100% satisfied. That’s right, completely satisfied homeowners. Whether you want a home built on one of our home sites or on your own land, count on the same high quality from Ameri-Star. We have set out to exceed all your expectations of integrity, affordability, and customer satisfaction. Build lasting memories for years to come with Ameri-Star Homes.