Tehama Country Real Estate

Tehama Country Real Estate – 3 Fixed Rate Or ARM Mortgages: Which One Is Right For You? Real Estate Spotlight By Alex Mason product to meet your budget starts with sitting down with a mortgage professional to discuss your options. F Never settle for anything but the best, and be sure to discuss your intent for the property and how long you anticipate remain- ing in the home. Your loan officer will take into account your income and credit rating to secure the best interest rates, and they will offer a points buy-down option to reduce the loan balance. Most importantly, he or she will explain the differ- ence between an adjustable rate mortgage, or ARM, and the popular fixed term loan for 15, 20, 30 or 40 years. There are pros and cons on both sides of the fence, so careful evaluation of your unique set of cir- cumstances will lead you to the right loan product to get you into your dream home. ARM LOANS The adjustable rate mortgage (ARM) is an attractive option for easy monthly payments and the chance to lock in to a current low interest rate. The ARM loan product will be set to adjust on a two-, five- or seven- year term period, at which time the monthly payment may increase if the current interest rate conditions are unfavorable. A higher interest rate may be due to nationally set standards or may be affected by the borrower's cred- it score taking a nosedive for reasons they were not able to control. Medical bills, emergencies and a host of unpleasant financial surprises can make the ARM loan risky business if the resident plans to hang on to the home and stay there for many years. The ARM loan may be the ideal funding situation for borrowers who anticipate a short-term stay in the property or wish to rehab the home while they are living there and sell the property before the ARM adjusts. The ARM loan product is typically lower than a fixed rate, but the long-term goals of the resi- dent and careful analysis of the borrower's budget must come into play. FIXED-RATE LOANSThe fixed-rate loan is the inding the right loan most popular and dependable loan product for bor- rowers who wish to remain in the home for many years. This type of mortgage may be set for a payoff according to the borrower's ability to handle the monthly mortgage. If you are able to make a higher payment, then ask your loan officer for his or her best rate on a 15-year contract. However, if you prefer to free up your monthly cash flow and can anticipate the loan balance to be paid off before retirement, the extended 30- to 40-year fixed rate ensures a steady monthly mortgage payment with no surprises down the road. Fixed rate mortgages are a bit higher than the ARM, but the peace of mind and stability they promote are well worth the extra amount. The down side to the ubiquitous fixed rate mortgage is that the borrower will not be able to take advantage of a better interest rate climate without going through a costly home refinance option. Refinancing a property requires sufficient equity and an official appraisal above the new loan amount to be compliant with lending institution regulations. Sold as the number one loan product for savvy buy- ers, the fixed-rate mortgage helps to keep your finan- cial status in check for long-term planning and the security that your fixed payment is guaranteed for the life of the loan. Ask your local loan professional to explain to you all your mortgage options and rest assured that your educated decision will be the right path for you. Alex Mason is a former real estate agent and mortgage bro- ker living in Los Angeles.

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