Home Loans
Mortgage Refinancing: What You Need to Know About Interest Rate Types
(presented by www.refinance-refinance.net - mortgage lenders)
By Louie Latour
If you are considering mortgage refinancing, choosing the right type of mortgage is one of the most important aspects of your new loan. There are mortgage refinancing options available for nearly every situation; however, choosing the wrong type of mortgage could be a costly mistake. Here are several tips about mortgage interest rates to help you choose the right mortgage for your financial situation.
Mortgage loans fall into three basic types depending on the interest rates. You have the choice of a fixed interest rate, an adjustable interest rate, or a hybrid loan featuring both types. The type of mortgage you choose depends on your financial situation and tolerance for financial risk. Here are the pros and cons of each type of mortgage interest rate.
I. Adjustable Interest Rates
Adjustable rate mortgages are becoming one of the most popular interest rate choices. Nearly half of the mortgages taken out today are Adjustable Rate Mortgages. These loans are increasingly popular because of their low introductory interest rates. What many homeowners do not understand is that the introductory period only lasts for a period of time specified in your loan contract. When the introductory period ends the lender will adjust your mortgage to the actual interest rate and the payment amount will go up significantly. If your budget is already stretched to the limit you could find your payment unmanageable when the lender resets your interest rate.
II. Fixed Interest Rates
If you have little tolerance for financial risk, traditional fixed interest rate mortgages offer a degree of safety you can plan your budget around. Choosing a fixed rate will get a slightly higher interest rate than an adjustable rate mortgage; however, you will have a fixed payment amount and interest rate locked in for the duration of your loan. Because the interest rate you receive with a fixed rate mortgage will be slightly higher it is important to shop around for the most competitive loan offer. By!
qualify
ing for even a quarter point lower interest rate you will save yourself thousands of dollars over the live of the loan.
III. Hybrid Mortgage Loans
Hybrid loans offer the best of both worlds. By choosing a hybrid loan you will have a low, fixed introductory interest rate for a specific period of time followed by an adjustable interest rate that resets at regular intervals. If you took out a 5/1 hybrid loan for example, you would have a low fixed interest rate for the first five years and the lender will reset your rate and payment amount every year after that.
In order to qualify for the best mortgage interest rate it is important to do your homework and comparison shop loan offers. When comparing mortgage offers it helps to shop from a variety of lenders. When you compare mortgage lenders it is important to compare all aspects of the loans and not focus solely on interest rates. Homeowners that focus only on the interest rate often overpay lender fees and closing costs. To learn more about qualifying for the best interest rate without overpaying for your new mortgage, register for a free mortgage guidebook.
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To get your free mortgage guidebook visit RefiAdvisor.com using the link below. Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of “Mortgage Refinancing - What You Need to Know,” which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com. Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com |
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