by Gus Taperman
If you are planning to settle down and remain in your home until your children have finished their education you will want a fixed rate mortgage. The same applies if you are planning to retire and want to buy a retirement home. A fixed-rate mortgage offers you low rates of interest over a 30-year period and does not cost all that more than an adjustable-rate mortgage. What you are buying is the knowledge that your interest rate will not fluctuate and it is worth that little bit extra for this peace of mind. If your finances are in good shape and you can afford higher monthly repayments, it might even be a good idea to consider a 15-year mortgage in order to reduce your total interest.
It's best to go to a mortgage banker for a fixed-rate mortgage, because this means going direct to a lender! In this way you can skip the intermediaries and therefore the fees that these outfits charge for contacting the lender on your behalf. Mortgage bankers specialize in fixed-rate mortgage and this is how they make their money.
If, on the other hand you are the sort of person who loves just to stay in their house for no more than a few years and then plans to move on, you will be better off with an adjustable rate mortgage or a delayed adjustable. The latter are also known as 3-1s, 5-1s or 7-1s which means that they are fixed for up to seven years before converting to a one-year adjustable. There are a number of options and it is also possible to later convert your delayed adjustable loan to one with a fixed rate, but don't wait until the loan starts adjusting before you do so! It's best to go to midsize banks and thrifts for this kind of deal as they are the most competitive in the adjustable market. You can also try your bank especially if you already have a checking account with them!
It is an entirely different situation if you want to move to a much more expensive house with a huge mortgage, you are qualified for the loan and can afford a large deposit. In this case what you need is a jumbo loan, which in lenders' eyes is equivalent to five smaller mortgages. At one time they used to charge rates of one half to one percentage point higher than average to offset the huge risk of it going wrong. However times have changed and writing jumbo loans has in fact become the most competitive section of the mortgage market, so interest rates have gone down. You can go to any lender for a jumbo loan, either fixed-rate, adjustable or delayed adjustable and they will be very happy to sell you one if you are eligible.
Gus Taperman holds a Bachelor's degree in Commerce and completed his master's in Business Administration . He is working as writer and financial consultant to find a Personal loans, Debt consolidation, home equity loans at cheap rates visit www.taperman.com