Which mortgage is best for you is going to be heavily dependent on your specific situation. We understand that, which is why we won’t try to steer you towards one mortgage product or the other in this blog. Instead, we’ll explain what sort of people may benefit from each type. After all, in order to find the product best for you, it’s important that you know what products are even available.
Variable Rate Mortgages is periodically adjusted throughout your mortgage term in order to reflect the current market conditions. As the prime rate at the bank is increased or decreased, the interested owed on your mortgage payment will fluctuate as well. This means if interest rates go down, then you’ll owe less, and if interest rates go up, you’ll owe more. Often (but not always), homebuyers with a variable rate mortgage pay a little less over the life of their mortgage. However, they always need to be prepared for interest rates to rise.
Because of this, variable rate mortgages best suit homeowners with a healthy savings and a little bit more income. The general test is whether or not you could comfortably afford a mortgage rate 2% higher than the current one, but it’s worth remember interest rates are really low right now. So if you don’t have much wiggle room, you may not want to take the risk.
Fixed Rate Mortgages does not fluctuate. You and your broker decide on a rate, and that is the rate you pay for the entire term regardless of whether the market goes up or down. Some buyers really appreciate the stability that comes with a fixed rate mortgage. They know exactly how much they’ll be paying each month and can budget accordingly. While they may pay a bit more over the lifetime of their mortgage, the peace of mind is worth the cost.
Give that, if you’re the sort of person who is always aware of their budget and where each penny is going, then you’ll probably love the predictability of the fixed rate mortgage. If you’re on the fence, take a look at the difference between the variable and fixed rates. If there’s less than a 1% difference then the satisfaction of being able to plan ahead may be worth the slightly higher rate.
Whether your prefer a fixed rate mortgage or a variable rate mortgage will be determined by your situation and priorities. Before choosing one over the other, we recommend coming into Source Mortgage to talk with one of our mortgage experts. Call and book your appointment today.
Source was absolutely great to work with - went above and beyond to help us get everything done when buying our new home. Highly recommended!! Chad and Jenelle Richards Jan 09 2013
Chad and Jenelle Richards
Added January 23rd 2013
|V.R.M.||Prime-.65 or 2.35%|