Friday, June 23, 2006

Fixed and Adjustable Rate Mortgages

Today’s mortgage lender offers many different loan programs to choose from. Each loan structure can affect your interest rate and monthly payments differently.

A fixed rate mortgage is the most common loan program. With a fixed rate mortgage, your monthly payments, which include interest and principal, will never change. A fixed rate mortgage may extend anywhere from 10 to 30 years, but the most common plan is set for 30 years. This loan is structured so that the interest rate remains consistent throughout the life of the contract, and the balance is paid in full at the end of the 30 year period. With interest rates on a steady rise, there has never been a better time to go with the 30 year fixed mortgage.

Another common mortgage program is the adjustable rate mortgage. An adjustable rate mortgage is designed to land you a reasonable monthly payment to begin with, however, keep in mind that with an adjustable rate mortgage, your monthly payments can, and probably will, increase as the interest rate changes.

Choosing which mortgage plan is right for you requires careful consideration of your current financial status, how you expect your financial status to change in the future, how long you intend to keep your home, and how you feel about your interest rate changing.

As always, we welcome any questions or concerns you may have regarding your decision on choosing which mortgage plan is right for you.

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