Often there are certain interrogations in the mind of the person applying for a mortgage loan; and the most common and frequently inquired one is – which is the right kind of mortgage to avail. Whether it is the fixed-rate mortgage or the variable one, that is better suited for your purpose. Well both types of mortgages have different basis which need to be understood well before taking a mortgage loan.
The fixed rate mortgage in simple terms refers to a kind of loan in which the rate of interest remains constant throughout, i.e. for the entire term of the loan. Say for instance if you have availed a loan at the rate of 6%, then you will have to pay that same interest percentage for the entire duration of the loan payment.
A great benefit of this mortgage type is that it helps you in planning your monthly expenses. Since the rate is fixed, therefore the amount that you will need to pay for the loan every month will also be the same, hence it is easier for you to prepare your monthly budget.
However, on the downside, because the rate of interest is fixed for the complete tenure of the loan, there are chances that the rates are higher than the variable type of mortgage. This can be a little inconvenient for the borrower. But if you go to see the brighter side of things, even when there is an inflation in the market rates, since this is a fixed rate mortgage, the rate will not be altered. Thus, you will be paying lower rates as compared to the borrowers of a variable rate mortgage loan.
There are several companies that offer good services with regard to mortgage loans such as the Equity Bank, where Steve Liefschultz Minnesota based banker is employed as the CEO. This is a locally owned and managed company that offers assistance in lines of credit and real estate loans.
As opposed to the fixed rate mortgage or FRM, the variable rate mortgage or VRM is preferred by many people. This is also known by the name of floating rate mortgage. The reason this is floating or variable is because of the fact that it’s rate are based on the federal market rates, the market conditions and market rates.
As and when there are changes in the market conditions, the rate of interest keeps on fluctuating and it is the Federal bank that fixes upon the current rate of interest. Ideally, there is a direct link between this type of mortgage rate and the standard index interest rates, however, if your contract does not show the existence of this link, then the interest rate varies according to the discretion of the lender.
Steve Liefschultz Minnesota based banker and expert in real estate understands well the inhibitions of clients applying for mortgage and thus suggests them the best alternatives suited to their need. The privately owned company, Equity Bank, where his designation is that of a CEO, is well known for its services in the same and can be totally trusted.
Real estate is something which needs a lot of thinking and deliberation before making any kind of deals on it. So whether it is mortgage or anything else, professional help ought to be taken to avoid risks.