Wednesday, October 23, 2013 / by Fra Jamir
A vital part of buying a Charleston home is getting a mortgage. But not all mortgages are the same. There are two general classes of mortgages; fixed rate mortgages keep the same interest rate for the full duration of the debt. The interest rates for adjustable-rate mortgages (ARMs) change every year after an initial period expires. You also choose the duration of the loan.
That’s the easy part. When it comes to choosing those details, coming up with the right option for your family can be a brain-twister (especially when you realize how big a difference different future scenarios might present). When you go about getting a Charleston area home mortgage, you need to account consider the major factors -
- Affordability. Your budget for month-to-month payments is the largest single element to gauge when getting a mortgage in Charleston. If you want to ensure lower monthly payments and minimize the risk of increases, tilt toward a longer-term fixed rate mortgage. If you can afford to risk a higher interest rate, a short-term ARM might be best.
- Future Rates. This can be a key issue when choosing between a fixed-rate mortgage and an ARM. If you suspect interest rates will decrease over time, you might tilt toward the ARM, since those mortgage payments will eventually decrease along with interest rates. If interest rates are headed up over the long haul, a fixed rate lets you to lock in today’s lower rates.
- Permanence. If you plan to live in your new home for just a short period, your choice for getting a mortgage may be less complicated. ARMs usually start out at a lower rate than do fixed-interest mortgages, and if you move before the adjustment period begins, you can take advantage of the lower initial rate and avoid the future possible payment increase.
Like all financial decisions, getting a mortgage in Charleston should be carefully undertaken: always keeping in mind your long-term financial goals.
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Jeff Cook Real Estate