subject: The Benefits And Drawbacks Of Best Adjustable Mortgage Rates [print this page] One type of mortgage that you can get is called an adjustable mortgage rate.This is different than a fixed rate mortgage which is traditionally considered the more safe option. However, you will find many home owners turning to adjustable mortgage rates these days.
Fixed mortgage rates enable a consistent interest rate, fixed for a pre-determined time period. It is advisable to opt for it for a period of more than 5 years as a time frame any lesser results in the fixed rate becoming too high in comparison to the market rate. On the other hand, an adjustable rate mortgage bases the rate off of the performance of mortgage backed securities and the rate can vary by several points over the life of the loan. If the interest rates go up, so will your mortgage. If it goes down, your mortgage will as well.
There are a few advantages of best adjustable mortgage rates. The first is that these tend to be a bit easier to qualify for. If you are having issues qualifying for the loan for the house you want, sometimes switching to best adjustable mortgage rates will make it easier to get that loan. A second advantage is that you can start off with lower monthly fees compared to a fixed rate mortgage. This is because generally the interest rates on these loans start off lower.
There are also a few disadvantages associated with best adjustable mortgage rates. To begin with, the price of your mortgage is going to change from time to time. These are much harder to budget for since the future interests rates are unknown. Secondly, if rates continued to go up and up, you could get to the point of not being able to afford your home anymore.
If you plan to go with best adjustable mortgage rates, you must carefully examine the terms and fees associated with best adjustable mortgage rates before deciding if that is the type of loan you want to go with. One thing you will have to decide on is how long the initial fixed period is going to be. While many best adjustable mortgage rates have 3 or 5 year fixed periods before they begin to adjust there are many different types you can use. You will also need to know when and how often the rate on the mortgage will adjust after the initial fixed time is up. Additionally, in order to protect yourself from fast rising rates you will want to know what lifetime cap there is on the loan.
