2006-12-10 06:19:01 · 3 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
Lots. The fundamental one is that you get to choose a balance between rate and risk: do you want to pay a bit more and buy insurance against rate increases in the future? Many people (including me) have taken new mortgage products where you get a lower rate up front, for a fixed time, knowing that the rates are likely to be higher in the future but accepting this risk on the expectation that money will be available at the time to pay the higher price. Of course, some people have taken too much risk in this, and have gotten burned. But that is what risk management is all about: sometimes you eat the bear, and sometimes the bear eats you.
2006-12-10 06:27:27 · answer #1 · answered by Anonymous · 1⤊ 0⤋
If you are planning on staying in the home for awhile, the best way to go is a 30 year, fixed mortgage. If you go this route you do not ever have to worry about the intrest rate getting really high. If you only plan to stay in the home 3 years or less, there is a 3 year arm that will give you a much lower intrest rate in the beginning. If you are still in the home after 3 years, the intrest rate can go up. I believe up to 4% higher than the original rate. If you are in the military, you can do a VA loan and those are also really good. My husband and I have a 30 year fixed intrest VA loan with a 6.5% intrest rate that will never go up
2006-12-10 14:23:53 · answer #2 · answered by Sunshine 2 · 0⤊ 0⤋
An ARM will generally have a lower interest rate to start, so will have a lower payment. If you're only planning on staying in the house for a year or two, it can be a good choice. If you're planning on staying for several years, then a fixed rate is better since your rate won't go up like it can with an ARM.
2006-12-10 14:23:02 · answer #3 · answered by Judy 7 · 0⤊ 0⤋