Shopping for Your Portland Real Estate Loan

By
Real Estate Agent with Oregon Realty Company

Portland Real Estate Loans have become part of a worldwide mortgage market and mortgage lending is impersonal and competitive. When you shop for the best loan don't pay too much attention to who is originating the loan. Instead focus on interest rate, points, processing costs and whether you want a fixed rate or an adjustable rate loan. The reason for this is that more than likely, your Portland real estate loan will be sold to one of the organizations made up of what is known as The Secondary Market. Savings institutions, mortgage companies and commercial banks may charge loan origination fees and they also may get fees for continuing to service the loan. They sell the loans they originate to Secondary Market institutions so that they have the money to loan to others.

Fixed or Adjustable?

The fixed rate mortgages offer Portland real estate buyers peace of mind with predictable monthly payments. Taxes may go up but the principle and interest will remain fixed throughout the life of the loan. When interest rates were rising rapidly in the late 1970s, lenders came up with ARMs or Adjustable Rate Mortgages. With an ARM, the borrower assumes the risk of rising interest rates. Both have their advantages and disadvantages.

Fixed Rate Loans

Advantages: As indicated earlier, predictability is the biggest incentive for choosing a fixed-rate loan for your Portland real estate mortgage.

Disadvantages: Fixed rate loans usually come with higher interest than the start up interest rate on a fixed loan. Down payments on conventional, fixed-rate loans are usually higher than the down payment required for an ARM.


Adjustable Rate Loans

ARMS may be called by various names including, variable-rate loans, adjustable rate loans or adjustable mortgage loans. They all feature an interest rate that can vary over the rate of the loan.

Advantages: The monthly payment on a typical ARM is lower in the early stages than the fixed rate loan. This may make it easier for the buyer to afford the home.

Disadvantages: As interest rates increase, your monthly payment may increase or the amount of your payment applied to the principle may decrease which means that you must gamble on property appreciation to offset this increase in your indebtedness.

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