Time to Shop... For a loan, that is.
It's time to
get serious about shopping for a loan. First, you'll need to understand the differences
between various types of mortgage loans. Once you feel comfortable with the basics,
it's easier to pick the most cost-effective mortgage loan for your situation.
Then you can compare interest rates, points and closing costs. So let's study
the specific types of loans and factors affecting their costs. Then we'll shop
Choose Between a Fixed Rate or Variable Rate
That is the first step.
the Better Deal? It depends.
can be unpredictable. Fixed rate loans are most attractive when interest rates
are low. That's when most homebuyers will simply lock-in the current rate. When
rates are high, more homebuyers purchase ARMs in order to keep their monthly payments
lower for the first few years.
Sound confusing? Don't be
concerned, interest rates can go up and down but the rules of the game never change.
Before picking a variable rate over a fixed-rate loan, you need to review the
pros and cons of each, and then decide which type makes sense for your situation.
Consider Other Factors in this Decision
must plan ahead before deciding what's best for you.
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