IF YOU ARE PURCHASING OR REFINANCING A HOME, YOU NEED TO ADDRESS THE ADVANTAGES AND DISADVANTAGES OF A FIXED RATE LOAN AND AN ADJUSTABLE RATE LOAN. FOR MOST PEOPLE, THIS CAN BE A CLOUDED AREA. ALLOW ME TO CLEAR UP SOME MISCONCEPTIONS ON THE TWO PROGRAMS.
FIXED RATE LOANS
ADVANTAGES
- STABLE
- NO CHANGES
- LOW RISK
- ONE PAYMENT & ONE RATE
DISADVANTAGES
- HIGHER PAYMENT
- HIGHER QUALIFYING STANDARDS
- NO FLEXIBLE PAYMENT PLAN
- HIGHER APR RATE
- YOU WILL PAY MORE INTEREST IN THE FIRST 3 TO 7 YRS.
- LESS PURCHASING POWER
THE FIXED RATE LOAN MAY NOT BE THE BEST CHOICE FOR SHORT-TERM FINANCING....10 YEARS OR LESS. ON AVERAGE, A HOMEOWNER REFINANCES EVERY 3 TO 5 YEARS. THIS MEANS THERE ISN'T MUCH EQUITY BUILDING DURING THAT TIME, AND NOT A LOT OF PRINCIPAL REDUCTION OF THE LOAN DURING THAT SHORT TERM AS WELL.
NOW, LET US LOOK AT THE PROS AND CONS OF THE ADJUSTABLE RATE PRODUCT.
ADJUSTABLE RATE LOANS
ADVANTAGES
- LOWER PAYMENT
- LOWER INTEREST RATE TO START
- EASIER TO QUALIFY FOR
- FLEXIBLE PAYMENT OPTIONS
- WORKS WELL WITH UNPREDICTABLE INCOME
- HAS MORE PURCHASING POWER
DISADVANTAGES
- HAS THE POTENTIAL TO ADJUST AFTER THE INITIAL FIXED TERM OF 2 TO 10 YRS.
AS YOU CAN SEE, THERE ARE FEWER DISADVANTAGES WITH AN ADJUSTABLE RATE LOAN. THIS IS A PERFECT LOAN PROGRAM THAT WILL MAXIMIZE YOUR DAY TO DAY $$.
IN CONCLUSION, THE FIXED RATE LOAN PROGRAMS ARE FOR LONG-TERM INVESTMENTS OF 10 OR MORE YEARS. THE ADJUSTABLE RATE LOAN PROGRAMS ARE FOR SHORT TERM INVESTMENTS OF 10 YEARS OR LESS. WITH THE ADJUSTABLE RATE LOAN, THE MONTHLY SAVINGS COULD ALLOW YOU TO PURCHASE A CAR, BOAT, RV, SECOND HOME OR RENTAL PROPERTY, AND/OR A RETIREMENT PLAN. THE OPTIONS ARE ENDLESS
WITH YOUR NEXT REFINANCE OR PURCHASE, LOOK AT AND WEIGH THE ADVANTAGES AND DISADVANTAGES OF BOTH MORTGAGE PROGRAMS TO SEE WHICH ONE WILL BENIFIT YOU NOW...AND IN THE FUTURE.
CALL US TO HELP YOU SELECT THE FINANCIAL OPTIONS THAT BEST FIT YOUR NEEDS.
Comments(0)