If you’re thinking about buying a home in DC Ranch, you’ll have several financing options available – but two of the main types of mortgages are fixed-rate and adjustable-rate. The two are very different, so you need to understand what sets them apart before you begin talking to lenders and comparing loan terms.
What is a Fixed-Rate Mortgage?
A fixed-rate mortgage is one in which your interest rate stays the same over the loan’s lifetime. The interest rate you’re locked into at the beginning of the loan will be the same 10, 15 or 30 years from that date, regardless of what interest rates the market dictates. This means your mortgage payments won’t change between your first and last payments unless you refinance or otherwise reorganize your debt to the lender.
Pros of Fixed-Rate Mortgages
- Your payment is always the same, so you can budget accordingly
- You may be able to score a low interest rate that’s locked in for the rest of your loan’s life, and you don’t need to worry when interest rates go up
What is an Adjustable-Rate Mortgage?
In an adjustable-rate mortgage, your interest rate can fluctuate based on what’s happening on the market. You’ll generally have an initial fixed-rate period (usually ranging between 5 and 10 years, with the average being 7) where your payments won’t change; your interest rate will stay the same during that period. After the initial fixed-rate period ends, your interest rate can adjust based on current interest rates. Typically, interest rates on an adjustable-rate mortgage only move once a year.
Pros of an Adjustable-Rate Mortgage
- You could be eligible for a lower interest rate during your initial fixed-rate period than someone who’s using a lifetime fixed-rate mortgage
- You could enjoy lower payments during the adjustable-rate period if interest rates are dropping for new buyers
You have the right to shop different lenders to find out what they’re each willing to offer you. Even if loans look similar, interest rates and other terms vary between lenders. One lender may stand out among the rest, or they may all be pretty close – and the choice of which lender to use is entirely up to you.
It’s a good idea to explore both types of loan options when you’re buying a new home so you can make the most informed decision possible.
What if You Don’t Know What Lender to Use?
If you need help finding the right lender for your needs, ask your DC Ranch Realtor®. Your agent will be able to give you recommendations based on his or her knowledge and experience with past clients. It’s always best to shop around for the best rates and most favorable terms, even if you’re already confident in a particular lender – and you can even tell your preferred lender that another lender is willing to offer you more favorable terms; your preferred lender may want to meet those same terms or even improve on them.
Do You Need to Talk to a DC Ranch Realtor?
If you’re interested in buying a home in DC Ranch, we’d love to help you find one that’s just right for your needs.
Call us at 480-360-0281 or get in touch with us online to find discover what DC Ranch has to offer you. While you’re here, check out our:
- Country Club Village homes for sale
- Desert Camp Village homes for sale
- Desert Parks Village homes for sale
- Silverleaf Village homes for sale