Whether you are buying your first home or selling a home to find a better place, you will need to understand the financing choices available to you. Home loans can come in the form of a fixed-rate or adjustable-rate mortgage (ARM). Review your selections carefully to understand the pros and cons of each. Now is a great time to look for a home loan in Florida. Florida residents interested in purchasing a home have some great options in the Tampa area when they work with Associates Home Loan of Florida.
Pros and Cons of Fixed-Rate Mortgages
A fixed-rate mortgage comes with an interest rate that usually cannot change during the loan, which can be useful if the market becomes unstable. Going with the option of a fixed-rate mortgage can help establish a stable cost that you can easily measure and factor into your budget planning. In the past, as housing markets became less stable, the fixed-rate mortgage option has protected people from rising rates. However, if the market changes and a better rate becomes available, it is more difficult to take advantage of this opportunity. To change the rate, you may need to refinance the mortgage at this point, which takes time and will cost you more fees.
If you are comfortable and wish to stay in the home for a long period, then a fixed-rate mortgage could be the right choice for you. This way, you will understand the cost of the mortgage during the time you plan to stay in the home. However, in some instances, a fixed-rate mortgage may be more costly than an adjustable-rate mortgage over the life of the loan.
Pros and Cons of Adjustable-Rate Mortgages
With an adjustable-rate mortgage (ARM) you are choosing a loan where your interest rates may fluctuate over time. You can find mortgages where the rate changes are capped annually. There are also ARMs that set ceilings on the overall increase in rates allowed for the duration of the loan. If you select this type of loan, you might be more vulnerable to changes in the market and economy. However, if you need to build capital or improve your financial position, you can find an ARM with a low upfront rate, so it costs less up front and you may be able to set extra money aside.
Sometimes, customers with ARMs will see rates rise dramatically and they will not be able to refinance or adjust the loan. You should plan your future financial goals and revisit them often with this type of mortgage. If you are uncertain, you can work with Associates Home Loan of Florida to take out each of the two types of mortgage rates (fixed or adjustable) on one home.
Help Making the Right Choice
Associates Home Loan of Florida agents have helped many Florida homeowners compare fixed-rate vs adjustable-rate mortgages. We work with trusted professionals that are here to benefit you and your unique needs. If you live in the Tampa Florida area, call us today!