The Advantages of the Adjustable Mortgage Interest Rate

by Kelly Richardson
Loan Page Columnist

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Choosing the right new home loan is no easy task. With mortgage interest rates constantly changing and the market in flux, finding the right mortgage for your financial situation is becoming increasingly difficult. Perhaps an adjustable mortgage interest rate is exactly what you need for your new home loan.

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An adjustable mortgage interest rate is one of the more popular new home loans available. This particular financial arrangement centers on the rising and falling interest rates. Also called a variable rate mortgage, an adjustable interest rate mortgage is a loan secured on a property that changes with the interest rate. If you plan to be in your home for a short period of time, then you will love the benefits that an adjustable rate new home loan offers. Here is a run down of what an adjustable mortgage interest rate can do for you.

The Adjustable Interest Rate New Home Loan

  • » Opportunity for Early Repayment. One of the best things about an adjustable interest rate loan is that you can prepay the entire balance early without suffering any penalties.
  • » Lower Early Fixed Rate. If you select an adjustable rate new home loan, you will get a lower fixed payment early in the loan that could possibly save you thousands of dollars in interest.

As with any mortgage agreement, it is best if you know the various factors that might come into play during the life of your new home loan. Here is a short list of adjustable mortgage interest rate loan extras that you will want to be aware of. Ask your loan professional to completely explain the terms of your loan before you sign.
  • » The Bottom Line. In an adjustable rate loan, if the interest rates drop, you win. If the interest rates increase, you lose.
  • » Protection. Your mortgage lender will have various protections for you in case interest rates increase suddenly.
  • » Closing Costs. You will be responsible for any closing costs and extra fees incurred with your new home loan.

Ask your mortgage professional about the advantages of an adjustable interest rate loan before you decide on your new home loan.

About the Author
Kelly Richardson holds a bachelor's degree in English and master's degree in education from Georgia State University.

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