When you’re getting a mortgage loan, the type of loan you get can matter a great deal. Whether you get a fixed rate or variable rate loan makes a big difference, and it isn’t always easy to know which type works best for your particular needs
Here are the main details about fixed and variable rate loans:
● Fixed rate mortgages: Fixed rate mortgages have a set rate of interest and a set payment once you’ve signed everything. This is beneficial, in that you can accurately predict how long it will take you to repay the mortgage in full, and you won’t suffer if the market-wide rates increase. On the other hand, you won’t be able to take advantage of market fluctuations if rates as a whole decrease. Also, the payments will tend to be more expensive than comparable variable rate mortgages.
● Variable rate mortgages: Variable rate mortgages have an interest rate that changes as the market-wide rate fluctuates. This can help you, since payment amounts will tend to be lower than a comparable fixed rate loan. Moreover, should the market rates go down, you could end up paying even less. Unfortunately, the reverse is also true; should the market rates rise, your payments will shift to cover more interest and less principle.
Consult the experts at Midland Mortgages to learn more about different types of loans. Our staff will help you to get a purchase money loan, or whatever other kind of loan you need.