An Insider’s Perspective on Mortgage Interest Rates

Why go for mortgage loan?

Most of the middle class Americans who are interested in purchasing new home for him and his family members to live in will not be having the full price to be paid to the seller to buy the home. Hence, he will always be looking for mortgaging the home that he intends to buy with a financial institution or a mortgage lender to help him out financially to settle the deal amount for the home to its seller. Once a person’s home has been mortgaged to a financial institution, the homeowner will have to pay the loaned amount in easy monthly installments as per the mortgage interest rates fixed by the money lender with a stipulated time frame. Taking a mortgage loan works out to be advantageous for a homeowner as he will be now be able to pay the taxes to the insurance company or the bank only on timely periods as stipulated in the mortgage deed with a certain interest rate and not one shot. There are different types of mortgage interest rates that you can select based on your financial condition as well as the mortgage plan that you have chosen.

Fixed mortgage plan

A fixed mortgage interest rate plan is one wherein the interest rate is fixed and will not change at any time even if it rises or decreases and it has got nothing to do with the prevailing market interest rates. These mortgage interest rates are ideal for people who are not willing to take the risks of leaving their interest rate fluctuation to the market and will be certain of the loan amount along with the interest that they need to pay over a stipulated period of time.

Variable mortgage interest rate plan

A variable mortgage interest rate plan is for those people who are willing to take a risk with the fluctuating interest rates and they will be required to pay the mortgage interest rate as per the prevailing market rates every month. Sometimes, the homeowners will be able to pay a lower monthly installment and in some months the installment amount can be higher than the previous month. There is a certain period of month where the interest rates will be the same after which the interest rate will be fixed as per the prevailing market rate.

Interest only mortgage plan

If you are willing to pay only lower monthly installment amount at the start of your mortgage repayment, then going for interest only mortgage interest plan will be the best option. You will only be required to pay the interest amount on the mortgage for a fixed period of time initially and the principal amount will stand as it is. But after the fixed time period is over, you will be required to pay the full loan amount and this is the most preferred option chosen by many small time homebuyers in America owing to the lower initial monthly payments.