The Dynamic of Home Mortgage Interest Rates
Home Mortgage interest rates are based on a wide variety of variables.
For example, are you interested in exploring and potentially contracting
into a fixed or otherwise prefer an adjustable rate? In such instances,
you are able to achieve a lower interest rate over-time, as you
continuously pay off your monthly to annual mortgage rate interests,
fees, and taxes - and of course insurance payments - in a timely manner.
That is, as banks and lenders in general make it an effort to 'reward'
such consumers as the statistical probability increases that they will
pay the entire mortgage off the closer they get to 'reaching the finish
line' or paying it off completely. In fact, a similar dynamic and
repayment plan is often seen with automobile loans as well.
Many consumers desire such a 'vanilla product' known as fixed-rate
mortgage interest rate plans because they are able to consistently
anticipate the monthly payments over a period of 10 to 20 years or
more - in many instances 30-50 years.
At the same time however, obtaining a fixed-rate home mortgage also puts
consumers at a disadvantage because if they're locked into a high rate,
that is the rate they're indefinitely left to pay; which in essence
means in the beginning of the home mortgage process they were limited to
a certain price range median - for example, due to an unusually high or
increased interest rate due to low credit or not a high enough or
desirable salary + net worth or income.
Variable Rate Home Mortgages on the other hand are just that - they vary
in the nature of amount and requirements or demands on a monthly to
annual basis. Unfortunately, such a situation can be either beneficial
or detrimental to a borrower - dependent upon the circumstances.
Although a more popular choice, as they're easier to obtain for most
borrowers due to their lower monthly payment or annual contract, they
can also be very dangerous and costly to borrowers as they have been
observed to increase as much as 100% in monthly payments in the past due
to fluctuations in the market and changes in the interest-rate system or
criterion. Worst, such variable rate home mortgages are also much more
commonly known to subject borrowers to hefty late-fees, and especially
any attempts to remortgage or otherwise alter their payment plan,
structure, and agreement due to unruly or unaffordable changes in the
mortgage agreement and interest rates.
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