Choosing the type of interest rate to meets your needs, is one of the many decisions you will make when considering the purchase of a home in Charlotte North Carolina. There are advantages and disadvantages to each. You need to be clear, before deciding, on what your future plans and expectations are.
If you are purchasing a home in the Charlotte area, with the intentions of moving again soon, and don’t plan on renting the home out in your absence, an adjustable rate mortgage may be a consideration.
Adjustable rate mortgages are usually more appealing when the interest rates are high. The mortgage lending institutions can offer lower interest rates to attract potential buyers. But keep in mind, when the market fluctuates, so does your house payment.
There are a few very important questions that you should ask your lender about the adjustable rate mortgage. How often can your IR change? What is the lender’s adjustment period? How often will your loan and interest rate be recalculated? What are the cap percentages for the adjustable rate mortgage you are being offered?
If all these questions are answered to your satisfaction, and you don’t mind the fact that your house payment may go up several times during the year, you only plan on occupying the house for a short time, and the interest rate, at the time of the loan, outweighs the current interest rate of a fixed loan, then the adjustable rate mortgage loan may be your choice.
If you prefer a house payment that doesn’t change when there is a shift in the market, and you are planning on purchasing your home in Charlotte as a long- term investment, a fixed interest rate mortgage loan may be better suited to your needs.
With a fixed mortgage, the interest rate on the loan will remain the same throughout the term.
The interest rate will not change on the original note; therefore your house payments will remain the same each month. To most, especially in these tough economic times, this is a very important factor, and why so many choose a fixed mortgage rate.
Sum up the advantages and disadvantages of both the adjustable mortgage rates and the fixed mortgage rates. Decide which one offers the most benefits in your particular financial situation, and select the one that best meets your current or future needs for you and your family.
Ken Lutz is an experienced REALTOR® based in Charlotte, North Carolina. Thinking of purchasing a home in the Charlotte, NC Real Estate market? Ken Lutz is a professional with all the answers you need!