FIXED RATE MORTGAGES

There are many types of mortgage programs to choose from but there are only two basic types of rates fixed rates and adjustable rates Fixed rate mortgages are typically the most popular choice. With adjustable rate mortgages your interest rate changes periodically over the term of your loan but with fixed mortgages your interest rate is fixed and will never change. This means that the interest rate you lock in on the day you purchase your loan will be the same interest rate that you have when you make your final payment Because the interest rate never fluctuates your monthly mortgage payments will always remain the same for the interest and principal combined payments may fluctuate slightly if property taxes or homeowners insurance is included. Fixed rates are often the preferred mortgage rate because they provide a sense of security and predictability that adjustable rate mortgages cant offer However they can also be the more expensive choiceIf you are trying to decide whether or not a fixed rate mortgage is for you here are some other pros and cons to consider.If average interest rates surge outrageously those with a fixed rate dont have to worry

Consistent payments make everyday budgeting easier. A loan is a financial transaction in which one party (the lender) agrees to give another party (the borrower) a certain amount of money with the expectation of total repayment. The specific terms of a loan are often spelled out in the form of a promissory note or other contract. The lender can ask for interest payments in addition to the original amount of the loan (principal). The borrower must agree to the repayment terms, including the amount owed, interest rate and due dates. Some lenders can also assign financial penalties for missed or late payments.

Because a loan can contain many hidden costs such as interest payments and finance charges, many people tend to avoid applying for one until it becomes absolutely necessary. Purchasing a new vehicle or home almost always necessitates some form of financial loan, whether it be a bank mortgage or a private loan with the seller. Financing a higher education may also require a federally backed student loan. Interest rates on these types of large loans can be fixed at the time of the application or may vary according to the federal prime interest rate.

There is a very important legal difference between a gift and a loan. A very generous relative or friend may give you $5000 for car repairs, for example. If there is no expectation of repayment, the money can be considered a gift. The giver could not sue for repayment later in a civil lawsuit. But if the lender designates the money as a loan and the borrower pays back even one dollar, the money can be considered a legal loan and the lender can demand repayment any time. Small claims courts spend much of their time determining whether or not a transaction involving money was a gift or loan.