Homepage

Having identified your dream property, the next biggest decision you will have to make is whether to choose a fixed rate or a flexible rate. The formula used to determine the money you will pay for the repayment remains the same under both options. The only difference is with adjustable rates, the monthly payment may vary during the entire duration of the mortgage. Considering some factors will help you make an informed decision.

Buyers should opt for flexible rate only if they are financially stable to take on the higher repayments for a longer period of time. Moreover, they need to be mentally and emotionally prepared to take the risks associated with fluctuating interest rates. Avoiding the common mistake of opting for ARM because the initial lower installment enables them to buy a fairfax realestate property they want, which has a huge risk of creating financial instability if your income does not increase proportionately. Lenders take higher risks when providing fixed rate mortgages to real estate fairfax property buyers. Because the institutions are unable to predict the future lenders charge a premium for assuming more risk. For individuals who do not plan to assume the mortgage for a period extending to more than seven years, paying this premium is not advisable.

Savings on ARM come during the first two or three years of assuming the loan because these have lower interest rates when compared to fixed mortgages. However, if the rates increase the savings can be easily lost due to higher monthly payments. If you do not plan to hold the property for more than five years, choosing ARM can help you save money. Because no person is able to accurately predict the future movements of the interest rates, determining what you can afford while buying fairfax real estate is important.

Related Videos for Real Estate Fairfax