Adjustable Rate Mortgage

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Credit Union Mortgage Options: Fixed Rate Vs. Adjustable Rate Mortgages

By Cina Tucci : A how to tutorial about fixed rate mortgage, adjustable rate mortgage, home mortgage loan, Finance with step by step guide from Cina Tucci.

There are various differences between a fixed rate mortgage and an adjustable rate mortgage. Credit union option adjustable rate mortgages usually have a low interest rate. These types of adjustable rate mortgages allow the monthly payment to be smaller in the beginning and then over time. Usually a person choosing an adjustable rate plans to be in the home for 7 years or less. Because of this a rate is locked in only for a certain amount of years, then after that the rates will increase per year. For new, first time home buyers this adjustable rate is good because the payment are smaller and in most cases so is the borrower’s income.

But, over time as your income increases you will be able to afford larger payments on your home. With an adjustable rate with more income you will be able to afford a larger home. Adjustable rate mortgages are usually better over time because they can save you hundreds or even thousands of dollars per month Also adjustable rate mortgages protect you from interest caps. If this is that rate the borrower chooses, it should be the rate that is best for him and his needs.

If this is a first time loan, the borrower will usually choose a fixed rate. That is because the payment on the loan will stay the same until the term of the loan is paid in full. Also, people usually choose a fixed rate mortgage if they plan to stay in their homes for 15 years or longer. The best fixed rate mortgages usually are from credit unions because banks concentrate on making a profit whereas credit unions are not-for-profit and their purpose is to service their members and save them money. If you decide that you want to borrow from a credit union, you will receive a lower interest rate on loans than a bank.

All fixed rates are not the same nationwide. The lowest rates in Pine Bluff are 4.10% whereas in Miami fixed mortgage rates are 4.27%. This is higher than the national average rate of 4.16%. For those searching for a mortgage loan for the first time or even for a second mortgage this is vital information. Why? Because in either case the borrower will have to take the full amount of the loan immediately which, although the interest rate is fixed will still be more over 30 years.

This article was brought to you by Cina Tucci on behalf of Tropical Financial Credit Union. Tropical Financial Credit Union offers free checking, the best current interest rates on used car loans, best fixed rate mortgages and other financial services to members in Dade, Broward and Palm Beach County, Florida.

Original article published on PubArticles.com

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