Good credit or bad credit, there is a mortgage out there for everyone. The first step to finding the one for you is understanding whether you are right for a fixed rate loan or an adjustable loan.
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There are several types of loans that fall under these two categories. Home equity loans and construction loans can come with rates that are either fixed or adjustable, while home equity lines of credit and reverse mortgages can only be obtained with an adjustable rate. FHA loans and VA loans usually have fixed rates.
- A fixed rate loan has an interest rate that does not change. This means
that aside from taxes and insurance, whatever your monthly payment is the
first year of your repayment period will be the same in the last year. This
loan is generally seen as most attractive because of its stability and if
you qualify for a fixed rate, the best mortgage advice would generally be
to take advantage of that stability.
- An adjustable rate has an interest rate that rises and falls with current
rate indexes. These loans usually come with a low introductory rate, but this
rate is only guaranteed for a short time. People who are only planning to
live in a new home for five to seven years or people with bad credit tend
to utilize adjustable rate loans. The qualifying criteria is relaxed and while
there is risk, there is also the possibility of saving if the interest rates
remain steady or lower.
The best advice possible for anyone considering buying a home or refinancing is to find the mortgage that suits you and your purpose. Being educated about the types of loans available is the best way to find the one that is right for you. Fill out our free short form to contact up to four lenders about the perfect loan for you.