Among the first questions any person researching residential
loan asks, how long will it take to receive a mortgage quote?
At what rate will the interest be? And is it a fixed-rate
or adjustable rate-style mortgage?
While the answers provided to the aforementioned questions
should be the sole basis on which a decision to accept or
decline a mortgage, they do provide an idyllic place for
a consumer to begin their quest to obtain an optimal mortgage.
Out of all the mortgage and lending products on the market,
the fixed-rate mortgage is often viewed upon as being the
most desirable mortgage. This is because many people like
the notion of consistency in terms of what they owe and
when. With that in mind, the fixed-rate mortgage works very
similar to most other stable payments a person makes, i.e.
for rent, utilities and insurance. They pay a set amount
at the same time each month.
With respect to fixed-rate mortgages, the typical terms
of length available include increments of 30, 20, 15 and
10 years. Note: Though these may be the most popular terms
for taking out a fixed-rate mortgage, that in no ways guarantees
every lending institution will make each available.
Unlike its alter ego, the adjustable rate mortgage, the
fixed-rate mortgage generally is accompanied by a slightly
higher interest rate. However, fixed-rate mortgages are
ideal for the person who has: good credit, access to a down
payment of 20 percent or more and plans to reside in the
home for a minimum of between three and five years.
On the other side of the spectrum, an adjustable mortgage
rate is ideal for the consumer who: does not have access
to a large down payment, would not normally qualify for
a reasonable fixed interest rate and | or does not plan
to reside in the home for a minimum of three to five years.
Note: Although a home owner may qualify for a fixed-rate
mortgage, should they not plan to live in the home for a
minimum of five years; an adjustable rate mortgage (ARM)
may be a better option in light of the savings to be had
from making fewer payments made towards the interest rates.