Quick Hits: Fixed vs Adjustable Rate Mortgages | Service First Mortgage

Cat people and dog people. Day people and night people.

People come in all types, so it makes sense that mortgages would as well. From Conventional Loans to Renovation Loans, there are financial products out there that address a variety of different financial needs.

While there are several mortgage types, most will generally fall into one of two categories: fixed or adjustable rate.

FIXED VS ADJUSTABLE

As their names imply, these two loan types differ due to the fluctuation (or lack thereof) of their interest rates.

  • A fixed rate loan locks in a rate at the beginning of the loan and maintains that rate throughout the life of the loan
  • An adjustable rate loan’s rate can vary throughout the life of the loan
WHY WOULD I CHOOSE ONE OVER THE OTHER?

The type of loan that works for you would depend heavily on your financial circumstances. After evaluating your current and future goals, you’ll be able to make an informed decision regarding which loan type to pursue.

Fixed Rate

This type of loan is ideal in the following situations

  • You need the stability of the same payment every month
  • You believe that interest rates will rise in the future
  • You plan to live in your home for a long time

Fixed loans are most common, as many borrowers prefer consistency with payments in order to help with their budget planning.

Adjustable Rate

This type of loan is ideal in the following situations

  • You anticipate an increase in future income that can accommodate a larger monthly payment
  • You think that interest rates will remain the same or fall in the future
  • You only plan to remain in your home for a short period of time

WHAT’S BEST FOR ME?

After weighing the pros and cons of each loan type, you can make the determination regarding which one would best fit your needs. But there are many other considerations to take into account when planning for a mortgage.

A Loan Officer is trained to review your entire financial story and provide guidance to help you select a mortgage that will work for you. If you would like to discuss your mortgage options, contact us today!

If you’re ready to get started on your home buying journey, we can help!
Contact us today!

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