When you decide to buy a home there are a lot of decisions that you have to make. One of the most important decisions will be-"How will I pay for this home.?" Another important question would be"How long do I plan on living here?" These are very important because they will help you to determine what type of loan will be best for you. Although there are many loans to choose from, I am going to make it a little easier for you. I am going to narrow the field down to two type of loans.

First, lets start out with the ADJUSTABLE Rate Mortgage. Also know as an ARM.

Did you notice that I underlined the word Adjustable in the name of this loan? This is the single most important thing about this type of loan. You might ask,"What difference does it make if it is Adjustable or not?" Having and Arm can be like a two edged sword.By that, I mean that depending on what the market is doing will depend on if you rates are rising or falling. The best case scenario for you the consumer would be to Purchase a home with an adjustable rate and have the market going down. If this were the case , your payment would continue to go down. But, as most people have seen in the past 24 months that is not the case. People were promised low start rates that have went up and up . How does this affect you? As the rates increase, So, does your payment. Some people just barely qualified for loans at the lower rates. Now that the rates are rising they continue to see their payment go up. Eventually they will not be able to afford the payment and will be forced to refinance,sell, or ultimately face foreclosure. If you take the name of the loan, stop and think about it, You will realize that the loan payment will never remain the same. If you are buying the home for a short period of time this might be an option. Do You Feel Lucky?

Now we have my personal favorite, The FIXED Rate Loan.

98% of the loans I do are fixed rate loans. Unlike an Arm, This rate stays the same throughout the life of the loan. The principal and interest payment stays the same. I feel that this is the best loan to go with because you have no way to determine what may happen in the future. But you can be sure what your payment will be. Here is your worse case scenario with a fixed loan. If the rates drop, you can do what we call a rate and term refinance. This will allow you to take advantage of the lower interest rate and save even more money.

If you feel that you are lucky and the market will go down then try the Arm. I am betting that the rates will continue to go up and it will cost you in the end. If you want to take my advice and get your rate fixed, Give me a call.

Shaun Wren

WrenMB.com