Buying a home can be a great investment. If home prices in your area have been rising, buying now can help you stay in a neighborhood that you might otherwise be priced out of in a few years. And even if you don’t stay long term, a sharp rise
in local property values could mean a sizable profit when you sell.
If you've decided that buying is the goal for you, the next decision is whether to go with a fixed or adjustable-rate mortgage. Here are some things to consider.
Fixed Rate Mortgages
With a fixed rate mortgage, the interest rate is set at the time you take out the mortgage and remains constant over the life of the mortgage. The monthly payment level also remains constant. Knowing what your payment will be can be reassuring. Each monthly
payment is made up of interest and principal with early year payments being primarily interest, and payments toward the end of the mortgage being mostly principal. Most of the mortgage pay down comes late in the mortgage period.
Adjustable Rate Mortgages (ARMs)
With an adjustable rate mortgage, the interest rate and monthly payments can change as interest rates change. The rate is fixed initially and is subject to being reset based on changes in some interest rate benchmark. The big benefit to the borrower is
that usually ARMs have interest rates that are lower (at least initially) than the rates on fixed-rate mortgages. Sometimes it can even be 1½ to 2½ % less.
If you’re like millions of others, owning your own home is a primary financial and lifestyle goal. The pride of home ownership and the financial rewards are attractive. But if you’re worried about next steps, know that we’re here to
help you make the right decision for you. And we’ll stay with you through the home-buying process. Call us at 1 (800) 609-9009 or visit your local branch to make an appointment to meet with a mortgage specialist.
Peruse the infographic below to discover what mortgage is right for you.