Will You Chose a Fixed Rate or Adjustable Rate Mortgage? (Video)
By: Rosemary Rugnetta | February 12th, 2013
There are different types of mortgage products available for borrowers, as well as, different types of mortgage rates. Once a borrower is faced with this decision, will they chose a fixed rate or adjustable rate mortgage?
While each has its own advantage, each also has its own disadvantages. For the individual borrower, it really comes down to qualifying and comfort. Taking on an adjustable rate mortgage will produce a certain amount of risk for the borrower, although some borrowers may take on this risk as a financial tool.
The rules for mortgages are changing and, in the near future, it will be somewhat more difficult to obtain an adjustable rate. According to the Consumer Financial Protection Bureau, the “ability to repay” rule goes into effect in January 2014 and requires lenders to make sure that the borrowers can make the loan’s monthly mortgage payments at the fully indexed rate, not the teaser rate that is offered with an adjustable mortgage.
This video explains more about the difference between a fixed mortgage rate and an adjustable mortgage rate so that borrowers can understand and make a wise decision.
FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at about a 1 point origination fee.
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