Office: 614-538-1717
Fax: 614-538-1101
1695 Old Henderson Rd. Columbus, OH 43220
Rickert Realty
& Property Management

Fixed or Adjustable?

Information for Sellers

Choosing between a fixed rate or adjustable rate loans is the single most important nail-biter of a decision you'll ever make when choosing a mortgage. The mortgage formula -- the method used to determine how much you pay based on your interest rate -- is the same for both types of mortgages.

What differs is the very good chance that your monthly payment amount will change through the life of the loan.

How willing and able are you to take on financial risk?

Consider an adjustable-rate mortgage only if you're financially secure enough to handle the maximum possible payments over an extended period. You must also be emotionally secure enough to handle volatile rates. Don't take an ARM because the initially lower interest rates allow you to afford the property you want to buy (unless you're absolutely certain that your income will rise to meet future payment increases). Try setting your sights on a property that you can afford, with a fixed rate mortgage.

How long do you plan to keep the mortgage?

A mortgage lender takes extra risk in committing to a constant interest rate for 15 to 30 years. Lenders don't know any better than you or I what may happen in the intervening years, so they charge you a premium for their risk. If you aren't going to keep your mortgage more than five to seven years, you're probably paying unnecessary interest costs to carry a fixed-rate mortgage.

Savings on most adjustable rates are usually guaranteed in the first two or three years. An adjustable-rate mortgage starts at a lower interest rate than a fixed one. When the adjustable does what it does best, it adjusts. It's almost always limited or capped in the amount of each interest-rate change. If rates rise, you can end up giving back or losing the savings you achieve in the early years of the mortgage.

If you are pretty sure that you'll hang onto a property for less than five years, you should come out ahead with an adjustable.

Which way are interest rates going?

Some people ask "shouldn't the likelihood of interest rates going up or down determine whether I take a fixed-rate or adjustable rate mortgage?" (The logic goes that if rates are on their way up, then you're better off locking in a fixed-rate mortgage before it goes any higher.)

Forget it. You can't predict the future course of interest rates. If you could, you could make a fortune investing in bonds and interest-rate futures and options. Even the pros on Wall Street can't make these predictions with any consistent accuracy.
 

Dennis Swartz
Rickert Property Management
Ph: (614) 538-1717Fax:614-538-1101
1695 Old Henderson Rd.
Columbus, OH 43220 US
www.rickertmanagement.com
Home Search Homes About Us Thinking About Hiring a Property Manager? Tenants Log-In To Your Account or Pay your Rent Board Members Private Community Web Page Access Investor Clients Log-In To Your Account Commercial Listings Residential Listings NCH Tenants Log-In to your account Apartment Management Info Contact Us Featured Listings Meet Our Agents Condo Management Info Homeowner Association Documents Page Request a Repair Emergency Maintenance Needed Log-In To Your personal Condo Owner or HOA member Account Homeowner Association Management Info Sold Listings What We Do Current Property Available For Rent Repair Request Single - Multi Family Management Information Property For Sale Rental Approval Guidelines Emergency Repair Request Our Offices Open Houses Home Value Request Rental Application My Blog Pay Rental Application Fees Relocation Send Link to a Friend Instant Home Value Sell Your House Buyer Reports Seller Reports VIP Home Finder Calculators Documents & Files Preferred Partners F.A.Qs Local Schools Local Weather Local Area Real Estate News Daily Cartoon Relocalización ¡Haga una Pregunta! Glosario de Bienes Raíces Preguntas Más Frecuentes Real Estate Glossary Solicitud de Valoración de Vivienda Glosario Hipotecario Pre-Clasifique Buscador de Viviendas para Alquilar Solicitud de Vivienda VIP Articles Members Area Pay For Work Performed
Powered by LinkURealty - Real Estate Web Design & Websites