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Fixed Rate or Adjustable Rate Mortgage?
You are probably familiar with the two types of loans commonly offered by lenders for home purchases, along with some of the advantages and disadvantages of each. Some buyers prefer the certainty of a fixed mortgage’s monthly payment and rates, while others are attracted to the increased cash flow afforded by initial lower interest rates and monthly payments typically associated with adjustable rate mortgages (ARMs).
You will want to compare rates and terms offered by more than one lender for both types of loans, and consider other debts and expenses you have now or can anticipate arising in the near future to get a complete picture of how today’s decisions will affect your long term financial goals. Think about how long you plan to own your home, and how long you feel you can take to pay off your mortgage.
How important is it to you to build equity in your home quickly, or to become debt free? Having clear financial goals will help you make smart decisions about whether a fixed rate or an ARM is best for you, which in turn will help you manage your resources wisely today and in the future.
There are circumstances when a lender may require a variable rate. It is important when considering your options that you talk to more than one lender to compare what other companies can offer you with your current credit and down payment status as well as other goals for the property. Only a licensed professional is qualified to give you current rates and quotes for your unique situation
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