When looking to purchase or refinance a home, you will have many loan programs to choose from. In addition to the loan program itself, you will also need to choose between a fixed-rate and adjustable-rate mortgage (ARM). There are advantages and disadvantages to each option depending on your housing plans and goals. Vince Gutierrez Mortgage offers great rates on both fixed and adjustable rate mortgages throughout Spring, Texas, and can help you decide which is the best for your individual needs.
A fixed-rate mortgage has an interest rate that will not change at any point during the life of the loan. Homebuyers who are ready to settle down in an area may opt for the financial stability that a fixed-rate mortgage offers. No matter what happens in the market, your rate is locked in, so you always know exactly what your payment is going to be. Spring, Texas, fixed-rate mortgages are generally available as 15-year, 20-year, and 30-year loans.
Fixed-rate mortgages can often be more expensive in the long run when compared to adjustable-rate mortgages if rates are relatively high when you are purchasing a home. In order to take advantage of lower rates down the road, a homeowner with a fix-rate mortgage will need to refinance. Refinancing means you need to go through the process of acquiring a new mortgage, and with each new mortgage there are closing costs that need to be paid.
ARMs have an interest rate that will vary from time to time. For homebuyers who may only be looking for a short-term home in Spring, Texas, an ARM may be ideal. ARMs generally start with a lower rate than fixed-rate mortgages. This means that you will pay less at the start of the mortgage when choosing an ARM. An initial lower payment can also allow a borrower to qualify for a slightly larger, more expensive home. If mortgage rates remain favorable or improve, those with ARMs will automatically receive the benefits of the lower rates without having to refinance.
While ARMs may start with a low rate and payment, both can rise significantly during the life of the loan. If there are drastic changes in the market, rates can skyrocket in just a few short years. Rate changes are generally capped annually as well as over the total life of the loan. If market changes are significant enough, these rate caps can be reached in just a few short years and there is no telling if rates will go back down.
Whether you are looking to purchase your first home in Spring, Texas, or are looking to refinance your current mortgage, Vince Gutierrez Mortgage can help you select a fixed or adjustable-rate mortgage that meets the unique needs of you and your family. Contact us today for more information on the loan options available.