Whether or not it’s part of the “American dream,” buying and owning a home remains one of the most financially smart decisions any consumer can ever make. It’s one of the best investment ventures out there, allowing for not just financial stability, but also security that you’ll always have a place to call home.
However, seeing that it’s also one of the most expensive purchases you’ll ever make in your lifetime, you need to make certain you make the right choice. And as part of your preparation, you need to understand the major differences between a fixed-rate and an adjustable-rate mortgage.
The two primary types of home loans
Like in every other state in the country, home mortgages in Utah come in two primary forms: the fixed-rate and the adjustable-rate. Almost all lending institutions offer them, although their specific interest rate varies, and so do certain stipulations in their individual contracts. While understanding these is very important, what should take precedence is knowing how to distinguish the fixed-rate from the adjustable-rate mortgage.
Painting an image of how much you can afford
One of the first steps to getting the right choice in a mortgage is determining how much you can really afford in the immediate as well as in the short and the long run. Having a clearer picture of where your finances stand will help you establish which type of mortgage rate best suits you.
From here, ask yourself pertinent questions, such as how long you desire to stay in the same house. In case you wish to remain in it for a long time, then a fixed-rate loan may be the better choice. On the other hand, if you have plans of living in the house for only a decade or so, then the adjustable-rate may be more suited for you.