There are so many mortgage products and rates out there, it can be hard to choose which one is the best for you. The best mortgage rates aren’t always the lowest rates. Just like shopping for a vehicle; it’s not the cheapest car you always go for, it’s the one that’s best suited to you and your situation. The first thing you’ll want to do is understand the different types of mortgages. The broadest categories are fixed-rate and variable-rate mortgages, in which the interest rate remains the same for a specific period of time or fluctuates over a specific period of time, respectively. Depending on the conditions outlined in the variable rate mortgage, you’ll either retain the same monthly payment and the amount that gets paid toward the principal will change with the interest rate, or the payment itself may change.
Common Mortgage Types: Fixed or Variable Rate
Knowing what type of mortgage you want when it comes to having a fixed or variable rate can help you set your priorities: if you have a fixed-rate mortgage, you’ll know exactly what you’re paying for a set period of time, which would be beneficial if you’re expecting some changes in other areas of your life. It’s easy to stereotype these mortgages with fixed being safe and variable being risky, but that’s not the whole story. While variable-rate mortgages can be perceived as more risky, and they definitely have the opportunity to be more risky, they also tend to have smaller mortgage penalties.
Important Factors to Consider When Picking Your Next Mortgage
When negotiating your interest rate, just like all other aspects of your mortgage, you need to know your options. Here are a few examples of critical questions to consider when locking in your next mortgage:
What will happen if I need to refinance due to an unexpected job loss, break-up, unexpected home repairs, etc.?
Can I put extra money down to pay off the mortgage? If so, how much and when?
Are my closing dates flexible? What happens if they aren’t?
What if I move and sell my house before the mortgage is up?
While life can sometimes be unpredictable, I encourage everyone to do their research and work with a mortgage broker to make the best-informed decision for their unique situation. As a qualified mortgage broker, I work to give my clients the best understanding of their present situation, while taking into consideration their future needs as well. Contact me today to get started on finding the best-suited mortgage rates for you and your family.