Welcome to Home Mortgages
Home Mortgage Rate Article
This is a selection made from among articles on Home Mortgage Rate. For a permanent link to this article, or to bookmark it for future reading, click here.
The Difference Between A Fixed Rate Mortgage and A Variable Rate Mortgage
from:With the various options in the industry nowadays, this is probably the most confusing time for anyone who is considering to avail of a mortgage. Moreover, interest rates seem to be constantly fluctuating and this adds up to the confusion in getting the best option.
Generally, there are two major types of loans. These are the fixed rate mortgage and the variable rate mortgage. Both types have their own advantages and disadvantages which anyone should consider carefully.
A fixed rate mortgage makes the monthly payments the same all throughout. Interest rates do not change whether or not there is an increase in the industry. What was set at the very start continues until the entire loan has been paid for.
On the other hand, a variable rate mortgage paves the way for some adjustments in the interest rates. If the rates are higher now, monthly payments will increase as well, as regulated by a certain interest index. Advantage comes in when the rates decrease at a certain period of time.
If you are after stability, fixed rate mortgages are most suitable. However, if you are willing to gamble a bit and hold on to both possible risks and rewards, variable rate mortgages may be appropriate.
The previous years had shown significant decreases in interest rates. Such phenomenon has prompted a lot of people to prefer fixed rate mortgages. In this way, they have been able to preserve such stable interest rates over a period of time.
Fixed rate mortgages may run from 6 months to 25 years but the agreed upon interest rates are guaranteed in spite of fluctuations in the market. Security and stability are indeed not a question here so this is best for those with limited and fixed monthly incomes.
However, if you prefer a short-term option, variable rate mortgages seem to be best for you. With this type, you do not have to commit to a certain interest rate for a very long period of time. There is more flexibility.
Moreover, a variable rate mortgage gives the borrowers an opportunity to make the most out of lower rates. The interest rates are normally determined by subtracting a set percentage from a prime rate which is actually what banks usually offer only to their most creditworthy customers. This is, in fact, a source of potential savings that attracts a lot of borrowers.
Studies have shown that although rates are fluctuating, variable rate mortgages still contribute more savings over a fixed one. Most people are simply afraid to take risks that is why they opt for a more stable one. However, statistics show that variable rate mortgages are more advantageous over fixed rate mortgages 88% of the time.
In addition, if you have plans of selling your home after a number of years, variable rate mortgages will work best for you where equity is easily built. You can even opt to get a balloon mortgage which starts as variable and stops at a certain point. At such period of time, you will be required to settle the remaining balance in full and payment may come from the sales that you have generated out of selling the home.
To be able to know further which is better, it is always advisable to consult an expert in this area. Such expert can provide information on the movements of interest rates. He can also provide some insight on the interest rate climate which may then lead to the consideration of the option that matches well your financial situation.
Nevertheless, do not expect that the process shall be easy. Understanding the interest climate is not straightforward as there may be several influences in the current market. Foreign exchange, inflation, bond and equities markets, and foreign treasury policies are just some of the major considerations that experts look into.
Indeed, both types have pros and cons. It will then be up to you how you shall evaluate these but it is always important that you know your financial status as well as your plans for the future. Your evaluation must be as realistic as possible so that you will not end up carrying a burden that is too difficult for you to handle.
Home Mortgage Rate Specific links
Blinkx Video Search
- World's largest video search engine. Over 26 million hours of video.
-- http://www.blinkx.com/
Deductibles and Coinsurances
- Learn how deductibles, copays, co-insurance and maximums work in a fun and easy video format. -Stay Smart Stay Healthy
-- http://www.humana.com/
Watch Free Videos At Mevio!
- Tons of Free Videos, Only At Mevio.com
-- http://www.mevio.com/
Free Tech and Gadget Reviews!
- Watch GeekBrief With Cali Lewis on Mevio!
-- http://www.geekbrief.mevio.com/
Discover New Music
- Music Fans Discover, Enjoy & Reward The Best New Bands. Join Today.
-- http://www.ourstage.com/
Home Mortgage Rate News
Treasury Department considering mortgage market intervention - Charleston Daily Mail
WASHINGTON -- The Treasury Department is strongly considering a plan to intervene directly into the mortgage industry to dramatically force down rates and stimulate the moribund housing market, according to sources familiar with the proposal. Under ...
Read more...Mortgage rates drop again - United Press International
WASHINGTON, Dec. 4 (UPI) -- Interest rates for 30-year, fixed-rate U.S. mortgages fell dramatically during the week, the Federal Home Loan Mortgage Corp. ( OTCPK:FREJO ) said Thursday. "Thirty-year fixed-rate mortgage rates are now almost a full ...
Read more...Interest rates cuts: More than half of mortgage borrowers will not ... - Daily Telegraph
More than four million home owners on tracker mortgages are unlikely to benefit from there full cut because of so-called collars – whereby lenders no longer have to pass on interest rate reductions once the Bank of England base rate falls below a ...
Read more...Treasury weighs action on mortgage rates - MSNBC
The Treasury Department is strongly considering a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the moribund housing market, according to sources familiar with the proposal. Under the initiative ...
Read more...House prices falling at faster rate - Ananova
House prices fell faster last month, Britain's biggest mortgage lender said. The average UK home lost 16.1% of its value during the year to the end of November to stand at £163,605 - nearly £31,500 lower than 12 months ago, according to Halifax ...
Read more...Fannie Mae, Freddie Mac Mortgage-Bond Yields Fall (Correct) - Bloomberg
Dec. 4 (Bloomberg) -- Yields on Fannie Mae, Freddie Mac and Ginnie Mae mortgage bonds fell as Treasury Secretary Henry Paulson considers a plan to push home-loan rates down to 4.5 percent. Yields on Washington-based Fannie’s current-coupon 30-year ...
Read more...Low rates breathe life into mortgage market - Columbus Dispatch
A recent half-percentage-point drop in 30-year home loans is jolting a mortgage market that has been weighed down by a nose-diving economy and troubled credit markets. Mortgage applications were up 112 percent during the week that ended Nov. 28 ...
Read more...European Stocks, Bonds Rally on Interest-Rate Outlook as Euro, Pound ... - Bloomberg
Dec. 4 (Bloomberg) -- European stocks , U.S. index futures and government bonds advanced, while the pound and the euro fell as investors speculated central banks will keep cutting interest rates to revive economic growth. Credit Suisse Group AG ...
Read more...Financial industry pushes for lower mortgage rates - Dallas Morning News
WASHINGTON – Financial industry lobbyists are urging the Treasury Department to take steps to lower mortgage rates and help stabilize the battered U.S. housing market. Under one proposal, Treasury would seek to lower the rate on a 30-year mortgage ...
Read more...Treasury Department considering mortgage market intervention - Charleston Daily Mail
WASHINGTON -- The Treasury Department is strongly considering a plan to intervene directly into the mortgage industry to dramatically force down rates and stimulate the moribund housing market, according to sources familiar with the proposal. Under ...
Read more...