A Simple Explanation of a Fixed Rate Mortgage and an Adjustable Rate Mortgage
November 3, 2009 by Customer Care
A Simple Explanation of a Fixed Rate Mortgage and an Adjustable Rate Mortgage, by Des Moines Real Estate Experts RE/MAX Real Estate Concepts
When it comes time to take out a mortgage on your new home in Des Moines you will have to choose between getting a fixed-rate mortgage or an adjustable rate mortgage. If you are unfamiliar with these terms here’s a simple explanation of them both. Your Des Moines real estate agent will be able to explain these terms further.
Fixed-rate mortgage
In general the interest rate on the fixed-rate mortgage is relatively higher than the rate you can get for an adjustable rate mortgage. Your lending institution in Des Moines has to factor in any possible increases in interest rates over the term of the mortgage, and needs to compensate for any losses it may incur if the rates go up. This mortgage offers the most peace of mind for most people purchasing a home in [Profile.market] because you can count on the monthly payments to remain the same for many years.
Adjustable-rate mortgage
An adjustable-rate mortgage comes with a lower interest rate, however you are taking a gamble with this type of mortgage. If the interest rate rises considerably at any one time during your loan period, then you may find yourself with monthly payments that you simply cannot afford. You should consider all of the risks involved before deciding on this type of mortgage for your new home in Des Moines. It may not be worth the gamble, depending on your own budget and income.
The decision of whether to get a fixed-rate mortgage or an adjustable rate mortgage will be influenced by the present interest rate when you apply for the loan. Your loan officer in Des Moines can advise you as to whether it is a good time to get an adjustable rate mortgage or whether you should stick with a fixed-rate one.
There is a lot of free information available to you about buying, selling or investing in Des Moines real estate. For complete information about the Des Moines real estate market including current homes for sale, property values and more please visit the most complete website online dedicated to everything Des Moines real estate at Real Estate with RE/MAX. Please feel free to contact us with any of your real estate or mortgage related questions and we will be more than glad to answer your questions. Call us at 1-800-708-5890 or email us at dsm@realestateconcepts.net.
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