Several aspects would require due consideration regardless you were looking forward to purchasing a house or refinancing your existing home from the Best Mortgage Company.
Rate of interest
Borrowers would become price conscious when applying for a home loan from the Best Mortgage Company. The rate of interest has been deemed of primary consideration. For all purposes and intents, the lowest rate of interest offer would be the apparent preference. The next consideration would be whether you opt for a fixed and variable mortgage rate. For initial home buyers, the most probable choice would be fixed rate mortgage.
Fixed rate mortgage
It would have a fixed interest rate on the mortgage amount. It implies that you would pay a specific and equal amortization amount for the entire loan duration.
The benefits offered:
- The pre-determined payment would make the budgeting easier.
- The borrower would be protected from upward increase in present mortgage rates.
The downsides:
- The reducing rate of interest would keep you locked-in with higher rate of interest.
Variable rate of mortgage
The variable mortgage rate, also known as adjustable rate mortgage implies that the rate of interest would change with passage of time or during the adjustment periods. Therefore, the amortization payments would vary largely.
The benefits offered:
- The rate of interest would significantly be lower than fixed rate for initial few years. During the period, savings would be realized.
- The lower rate of interest in the beginning could also enhance the loan amount for the borrower.
- Perfect option for falling rate of interest in the market scenario. It would help in eliminating the need for refinancing a loan.
The downsides:
- Several changes made in amortization schedule make financing a tedious option.
- Higher amount of amortization would have higher adjustment rate along. It would also have significant financial impact for higher loan amount.
- The constant rate for specific duration would change for specific duration of adjustments. New rates would be aligned with prevailing rates of mortgages.
- With passage of time, the rate of interest would exceed the prevalent rates for fixed mortgage rates.
These aspects would be important to consider before applying for mortgage.
