Rate and Program are EVERYTHING!
What is a fixed rate loan?A fixed rate loan is a fully amortizing loan. Meaning, if you take out a 30 year fixed rate loan and make payments according to the terms of the note, your loan will be paid in full in 30 years. Or, if you take out a 15 year fixed rate loan, it will be paid in full in 15 years, and so on. Previously, a rate on a 15 year loan would likely be lower than a 30 year. But today, there isn't much of a difference in rate between repayment terms. Obviously, the advantage of a 30 year loan is a lower monthly payment because of the longer promise to repay the loan. Of course, the downside is there is a lot more interest accumulation over that period of time! |
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In most cases, maximum purchasing power is limited to the amount of total monthly payment. Thus, the lower the rate, the lower the monthly payment allowing a buyer to qualify for a more expensive home. As rates go up, a buyer's purchasing power goes down. Because of the balance between rate, purchase price, and loan qualification, it's often a good idea to talk to someone on the Lifetime Lender Team about "locking in your rate".
The Perfect Scenario!
Low fixed intere rates + high appreciation = best opportunity for increased equity. Of course, you can only access your equity when you either sell, refinance or take a home equity loan. There is actually a "break even" analysis The LifetimeLender Team can walk you through to determine best options when that time comes.
