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Pedro Said:

My fixed rate mortgage has come to an end. Should I get a new one now or hope interest rates fall again?

We Answered:

Run, not walk, to your bank and get a 15 year fixed rate loan. With all the stimulus borrowing (UK,EU,US) crowding out cosumer loan demand, it will be a very long time before you see anything near 5% fixed.

Deanna Said:

What happens when your fixed rate mortgage has expired?

We Answered:

When most people call something a fixed rate mortgage they mean a fixed rate fully amortized mortgage.

What you must have is a mortgage that the rate was fixed for a period of time and then it either balloons (you have to pay off the balance with cash or by getting a new loan somewhere) or the interest rates adjusts.

Either way you should find out what your loan will do. You should not get a loan that you don't understand. I would stick with fixed rate fully amortized loans- and I would stick with local loan officers that I can speak face to face with. A lot of very smart people have been conned by mortgage loan officers they only met over the internet. Even if it is a large well known company I would only deal with a local loan officer.

Hilda Said:

Is a fixed-rate mortgage better than a tracker rate in the current economic climate?

We Answered:

I'd rather have fixed mortgage.

Reginald Said:

What is the advantage of a fixed rate mortgage over a variable rate mortgage?

We Answered:

Simply, a fixed rate loan cannot change over the life of the loan. Thus your principal and interest payment will remain the same. The peace of mind of knowing your loan terms will not change is the most popular reason a fixed rate is chosen. With a variable rate loan, you risk having your mortgage payment increase when certain indexes in the marketplace rise higher than what they were at the onset of your loan. Historically, when you apply for a mortgage loan, variable rate loans are more attractive in the short term, since they typically have a lower interest rate for the initial period. The loans I refer to, called Hybrid ARMS, typically have a period of 1, 3, 5, 7, or 10 years in which the rate is fixed. After that period expires, the rate is subject to current market conditions (this is when the rate can rise or fall depending on the index upon which the loan is based). The factors to consider before choosing a variable rate loan over the security of a fixed rate loan are:

1. How long do you expect to own your current home?
2. How much is the difference in your monthly payment on a variable rate verses the fixed rate loan?
3. How prepared are you financially to adapt to an adjustment in the rate, if you were to hold the loan past the initial fixed period?

Emily Said:

What is the difference between a fixed rate mortgage and adjustable rate mortgage?

We Answered:

With a fixed rate mortgage, the interest rate never varies and your monthly payment stays the same for the life of the loan (excluding increases due to rises in real estate taxes). With an adjustable rate mortgage (or ARM), you usually start out with a lower interest rate than on a fixed rate mortgage, but the interest rates go up (or down) after a period of time and consequently affect the amount of your monthly payment.