When it’s time to buy a house, figuring out how to finance your purchase will be one of the biggest feats. There are several ways to finance your home loan. Fixed rate mortgages in Arizona are just one.
Fixed Rate Mortgage Explained
A fixed rate mortgage is a mortgage that carries an interest rate that’s fixed for the entire length of the loan and never changes. For example, if you get a thirty-year fixed rate loan at four percent, your interest rate will stay at four percent for the entire length of the mortgage. This is favorable to many people who know they will be in there home for a long time and can make consistent monthly payments for the length of their term. The key is to lock in an Arizona fixed rate mortgage at a desirable interest rate. Factors like the length of the term, market values and one’s financial situation affect the loan rates.
There are also shorter terms- ten year, fifteen year, twenty year and twenty-five. The same concept applies to the shorter term and often, a shorter term will grant a lower interest rate.
Many buyers choose the fixed rate mortgage because the payments stay the same. Unlike an adjustable rate mortgage, which might have some years at lower rates, it’s consistent. The adjustable rate mortgage might also be thirty years long, but only five years are fixed, and the interest rates going forward change depending on market value.
Buyers attracted to an adjustable rate mortgage might be expecting a future change. Perhaps there is a likely move in the foreseeable future, a job transfer is on the horizon or there is an expectation of money to be inherited. This dynamic would encourage a buyer to pay at a lower, fixed rate for the first five years and then when the presumed change occurs, to pay off the remainder of the loan’s principle balance.
Mortgage Lenders in Arizona at Your Disposal
Most people in Arizona stay in their loans for an average of five to seven years so the latter seems favorable. But right now, the market is so favorable and interest rates are so low, it’s hard to say no to fixed rate mortgages in Phoenix. Of course, it’s always best to see which financial scheme is best for you. At Nova Home Loans, we look to give you the most thorough education and a plethora of options to best suit your needs. Come and see us, today!