May 2001 




Variable Rates

National statistics show families move, on average, every 5-7 years. Why would people want a fixed rate mortgage? IF you know you will be moving every few years, why not consider a 3-5 year adjustable mortgage? Current interest rates, and the likely direction they might take in coming years, might be key factors in deciding whether to seek an adjustable rate mortgage. 


Fixed Rates

Current low interest rates are only likely to go up, so a 30-year fixed rate mortgage generally would make more economic sense.

IF you take a 15-year fixed rate mortgage, payments would be higher but you would own much earlier and the equity (100%) might finance college educations, etc. With a 30-year loan, you will have appreciation equity but not mortgage payoff equity.  


VA & FHA Loans

VA Loans are much more flexible on financing and credit. A down payment is not required, and qualifying ratios are more favorable. A VA Loan is a really creative financing opportunity.

FHA Loans have somewhat looser guidelines to deal with potential borrower's special debt and credit situations.



Some would-be-buyers, unable to get loans elsewhere, might consider "sub-prime" lenders. The interest rate is high but ask yourself: "Is paying a higher rate better than not getting into a house @ all?"



Remember that you have choices. Work with someone who can knowledgeably review the alternatives, with your particular situation in mind, and then decide which kind of arrangement is for you.


Source: Real Estate Professional Magazine


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This web page was updated on 04/27/2001