The Twin Cities are thought of as one of the most perfect metropolitan areas to live in the United States . If you like having the luxury of leaving your door unlocked at night and knowing all of your neighbors by their first names, then Minneapolis and the surrounding cities are exactly what you are looking for.
This guide to refinance, mortgage, and home equity loans in Minneapolis, MN will help you get a step closer to owning a beautiful home of your own in this wonderful place, just in time for the next Winter Festival and exciting Twins baseball season.
When you go to your lender to get your mortgage, you are going to be faced with dozens of different decisions, each varying in degree of importance. One of the biggest choices you will make is if you want a fixed rate mortgage or an adjustable rate mortgage. If you are going to a lender to get a home equity loan, you will not have to worry about making this decision since home equity loans are always lent on a fixed rate. However, if you are after your first mortgage or if you are looking to refinance choosing between a fixed and adjustable rate is a huge decision.
To fully understand why the choice between a fixed rate refinance or mortgage and an adjustable rate one is so important, you have to have a working understanding of interest rates. The interest rate on your loan determines how much money, or interest, you pay during the life of your mortgage. The higher the interest rate, the more interest you will pay.
And just so you understand exactly how important that is, let’s say you get a $200,000 mortgage over 30 years, at an interest rate of 7 percent. That would equal out to monthly payments of $1,330, for a total of $478,800 assuming you do not make any extra payments along the way. Now, let’s look at the same mortgage, $200,000 over 30 years, with a 6 percent interest rate and we will see how big one percent is when stretched out over 30 years. Your monthly payment drops to $1,199 per month, for a total of $431,640 over the life of the mortgage. That one interest rate point saved you over $47,000.
So, what does this have to do with fixed and adjustable rates? If you choose a fixed rate, the interest rate on your mortgage stays the same no matter what. If you choose an adjustable rate, the rate will change once per year, usually stating after five years. How do you know which one to go with? The key is to do some research on how interest rates have been moving over the few years. Look at historical trends and see what today’s rates are compared to how they were in the past. Do a little research and see what experts are saying about which direction rates will move during the next year or so. If rates are low, lock in that low rate with a fixed rate mortgage or refinance. If not, go with the adjustable choice. It is one of the biggest decisions you can make, so make sure it is an educated decision.
If you would like more information on refinancing, mortgages, or a home equity loans, click here and one of our experts will contact you.
