|
Fixed Rate Home Mortgage Refinance |
|
 |
Over the last year, fixed rate home mortgages have become
increasingly more popular. Many market
conditions have played a role in this transition from most of the home loans
being done as adjustable rate mortgages. For conforming loans, adjustable rate
mortgage rates are actually about the same as that of thirty-year fixed rates. So
even if cases where people only need their rate fixed for a short term, it just
makes more sense to give someone the fixed rate. A couple of years ago
conforming adjustable rates were incredibly lower than that of fixed rate,
therefore, most loans were being done on three or five year fixed rate periods.
However, the subprime home loan market has maintained adjustable rate mortgages
being much lower than fixed rate home mortgages. Much of this rationale is
behind subprime borrowers are usually only short term in loans. This is due to
the fact that many subprime borrowers are in temporary credit “slumps.”
|
Many
times adjustable rate mortgages are given to subprime borrowers, generally with
cash out used to pay off debt, giving them a two year opportunity to fix their
credit. Afterwards, many of these borrowers return to get on a much lower
interest fixed rate. All in all, fixed rate home mortgage refinancing is done
for those with a long run plan to stay in one place. Under normal market
conditions, a fixed rate home mortgage is generally not recommended for someone
with plans to move in the near future. However, for the individual who plans to
live in their house for eternity, with excellent credit, often times adjustable
rate mortgages are more of a gamble than they bargained for. |
|
|
