The Queen City of Cincinnati is a small but growing metropolis. This guide to refinance, mortgage, and home equity in Cincinnati , OH is focusing on interest rates and the advantages and disadvantages of fixed rate and adjustable rate loans. You have the choice of getting either a fixed or an adjustable rate on your refinance package or on your mortgage. However, if you decide to get a home equity loan, the interest rate will be fixed meaning it will not change or adjust over time.
Before we discuss the advantages and disadvantages of getting a fixed rate mortgage or refinance, we need to explain what each choice entails. Traditionally, mortgages and refinances came in two lengths: fifteen years and thirty years. But today, you can actually get a mortgage for a shorter term than fifteen years, but they are extremely rare. There are also terms longer than thirty years that banks have agreed to offer.
The term of your mortgage or refinance is simply how long you have to pay back the balance, and how long interest will add up on your mortgage. If you choose a fixed rate mortgage, the interest rate you have when you close on your home will be your interest rate for the length of your mortgage. Those that choose this path and realize later that they can get an even better deal are perfect candidates for a refinance.
Those that choose to get an adjustable rate mortgage will have a fixed rate for a period of time, usually five years, but it can be stretched to ten in some loans, and then, once per year, your rate changes with the changes in the prime rate.
Every time your rate changes, so will your mortgage payments. They can increase, decrease, or even stay the same if the rate does. Most adjustable rate mortgages are chosen by folks that were stuck with a high rate when they first bought their home. They might have used a sub-prime lender who gave them a higher then normal rate because they were a higher credit risk, or maybe rates were just generally high at the time they bought their home. The buyer chose an adjustable rate because they expect rates to decrease in the future, so their mortgage payment will decrease as well.
While it may sound like a gamble, it really is not. Experts are paid millions per year to accurately predict where interest rates are going, and this information is very easy to find either from your lender, the internet, or any financial magazine. Just a few minutes of research can save you thousands of dollars.
If you would like more information on refinancing, mortgages, and home equity loans, please click here and one of our experts will contact you.
