One of the most common challenges that new home buyers face is choosing the right mortgage rate for their home loan. Once you start the search for a home loan, you will need to know about fixed and variable mortgage rates. A mortgage broker in Riverside County or Orange County, California, may be able to help you find several mortgage lenders that will provide you with favorable offers. In the end, however, it is you who must make the final decision. The following information gives you a closer look at both fixed and variable mortgage rates.
A fixed mortgage rate is often the most appealing to new home buyers as they want to be able to control their monthly expenses as much as possible. When one signs up for this option, they don’t have to worry about fluctuating interest rates, and thus they are able to budget much more efficiently.
The downside to this option is that you may end up having a higher interest rate on your loan. This occurs because a lender has to protect their bank from potential increases in interest rates in the future.
Variable, or adjustable, rates are the option that some homeowners will take in order to take advantage of future falling interest rates. Although they risk the chances of having to pay more as interest rates rise, they are also putting themselves in a situation to save money in other areas.
For example, homeowners may end up having a lower monthly payment as choosing to go this route also comes with a better offer from the lender. Additionally, those who are not planning to make this purchase their forever home may have a better experience going with a variable rate.
As you can see from the information above, there are several reasons why either choice can be good or bad. That is why it is so important to consult with your family and financial advisor to determine which fits your particular situation.