Fixed Rate Mortgage Comparison With Adjustable Rate Mortgage: Select The Best Suited

PITTSFIELD, Mass. - July 26, 2013 - PRLog -- Now seemed like a good time to buy. At least that’s what our real estate agent was saying, but no one in my family had any idea how much the landscape of real estate had changed since the time I went looking for a home more than twenty years ago. Probably the most important decision our son was going to have to make was what he could reasonably expect to afford, and what type of mortgage would be a safe investment.

A mortgage is something you will be tied to for many years, and it needs to be a safe investment for both you and your lender. Consider the area, your employment, health, and what you want to do with your life.
There are two main types of mortgages to choose from in the United States: Fixed rate mortgages, and adjustable rate mortgages. People have reasons for choosing either and a good real estate agent can help you make the right decision.
Fixed rate mortgages are the preferred choice for people in the United States because the rate you pay each month never changes for the life of the mortgage. However…
Many financially successful people swear by adjustable rate mortgages because of the savings accrued during the first few years of a loan.

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Why Choose Adjustable Rates?

Initially we were attracted to mortgages with lower rates and we were asking ourselves what is an adjustable rate mortgage?  These types of mortgages are attractive because the initial down payment is often lower than is required on a fixed rate mortgage. The monthly payments on the mortgage will also be substantially lower than those of a fixed rate mortgage. Usually for 3, 5, or 7 years a homeowner with an adjustable rate mortgage will be enjoying low monthly payments. The catch is that after this amount of time expires the rates are readjusted and become much more expensive. It is a good investment for people who envision saving money for a few years on the initial investment and expect to have an income a few years later that can afford a higher monthly mortgage payment.

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What About A Fixed Rate Mortgage?

Fixed rate mortgages are safer and more attractive for their consistency throughout the life of the loan. If you can afford a higher initially payment towards the principal of your property than you can enjoy a home with month to month payments that never change. Most people who choose fixed rate mortgages expect to live in the same house for a long time.

Although it is possible to refinance an adjustable rate mortgage into mortgages with fixed rates, adjustable rate mortgages are more of a financial risk. If you are confident with your financial welfare you can save money initially in the contract. My son decided to find the lowest fixed rate mortgage he could and stick with something more consistent. We were able to find great help from advisors at www.real-estate-yogi.com. I would highly recommend them to anyone seeking help with their real estate endeavors. They can be reached by phone anytime at 1-800-987-1397.