At this point, we are going to take a look at the explanations behind the rise and fall in mortgage rates. Why do the mortgage rates go up or go down? Why does it seem as if there are actually ‘seasons’ when hot homes get sold instantly, whilst there are times when the selling rate is somewhat slow? Continue reading to understand.

Different Situations for Different Mortgage Loan Duration

Irrespective of whether it’s your 1st, second or third time purchasing a property, it is a must for you to perform your homework and compare different loan duration. Is really a loan with a much bigger mortgage monthly premium with a short loan period more preferable on your finances than that of a smaller monthly premium with a longer term? Doing comparisons like this is vital so as you’d know what move is best taken by you as a homeowner.

To provide you with an idea, here’s an example of the evaluation you could make when deciding which loan term length to select:

a. 15-Year Term Fixed Mortgage Loan Again, it is a must to stress that the interest rate of a particular mortgage loan that you’ll apply for will depend on the current movements in the real estate property market. Once you submit an application for a 15-year term fixed mortgage loan, for example, the rate of interest would be much less than that of a 30-year term fixed mortgage loan. This is now because the lender is taking on greater risks that you’ll either default or refinance the loan if it is active for that term.

b. 30-Year Term Fixed Mortgage Loan 30-year term fixed mortgages are planned to allow a homeowner to acquire the property. The extended loan duration is meant to benefit both the lender as well as the homeowner. Relating to the side of a home owner, the longer loan term would result to a lower month to month payment. On the part of the lender, the mortgage rates are computed in a way that they will also be able to benefit from profit-related benefits.

c. 30-Year Term Fixed Refinance Loan In the event you decide to pick a 30-year fixed refinance loan, the number one thing that you need to bear in mind is that the developments of the real estate market predicts what the rate would be. What is usually considered a low rate for this week might not necessarily the same amount for the coming weeks, which ends to some difference in the percentages involved.

d. Adjustable Rate Mortgage (ARM) Finally, there is the Adjustable Rate Mortgage (ARM) loan. If taking into consideration this kind of a home loan plan, keep in mind that the federal government is presently offering a lot of incentives to property owners as a result of the housing crisis which occurred for the past few years.

Evaluate the different Adjustable Rate Mortgage rates if taking into consideration this kind of loan, and ensure that you’re benefiting from one which provides you with the best series of advantages being a borrower.

Thus does a 15-year fixed mortgage or perhaps a 30-year mortgage sound more attractive to you? Regardless which type of mortgage loan you end up choosing, what is essential is that you consider all the options that you have got and make an educated choice by weighing the advantages and disadvantages of applying for each individual mortgage type.

Another great article by Calgary Contemporary Home Builder Also published at Learning About Mortgage Rate Trends.