Mortgage Loan Interest Rates: Rigid or Flexible

2007-03-08 10:33:40

( Financial )



Mortgage rates vary depending on the type you are availing of. Among the many types of mortgage loan interest rates, it is hard to say which one is the best because each type has it own advantages and disadvantages. To say that these are the best mortgage loan interest rates is to say that this plan is the most appropriate for my needs and financial situation.

FLUID RATES

While there are several variations of mortgage loan interest rates, there are actually just two basic types of mortgage rates – the standard variable and the fixed mortgage loan interest rates.

The standard variable mortgage loan interest rates are the most common type of mortgage rates. Under this plan, the rates are adjusted to match the existing rates in the market. Consequently, your payments will change to reflect the interest rate adjustment. Do not worry though; your payments will not change that much unless there is a drastic movement in interest rates.

An advantage of standard variable mortgage loan interest rates is that you will benefit if interest rates go down because your payments will decrease accordingly. In the same token, your payments will increase when market rates go up.

FROZEN RATES

Fixed mortgage loan interest rates sets a constant interest rate charge for a certain period of time. During this time, your payments will remain the same because your mortgage rates are fixed regardless of the market trend. The fixed nature of your mortgage interest rates may last the entire lifespan of your loan, or it may be temporary. After the prescribed period, your fixed mortgage loan interest rates will become standard variable as well.

There may be variations to these two basic types of mortgage loan interest rates. The arrangement depends on the programs being offered by lending institutions. Some lenders may have a slightly modified mortgage rates plan to target a particular market base.


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