Mortgage Quotes For First Time Buyers and Fixed and Variable Rate Mortgages

This letter is from Mr & Mrs Mike Pender about getting mortgage quotes before deciding which was the best type of mortgage for them.

Buying a new home is a complicated process. I never realized how many little details can get in the way of making a final decision. For example, after seeking out lots of mortgage quotes from the banks and building societies, we had a great deal of difficulty choosing between a fixed rate and a variable rate mortgage. This may not seem like a big deal to some. In fact, I thought that we knew what we would choose ahead of time but the whole thing is much more complicated than I anticipated.

The fixed rate mortgage seemed like the perfect choice. We would always know exactly what was owed on the loan each and every month and we wouldn’t have any surprises or mortgage sticker shock. We loved the idea of having this security but as we did a little more research the variable rate mortgage seemed like the right decision.

Basically, the major difference between the fixed and the adjustable rate mortgage is the steady monthly payment. The fixed loan payments do not change but the adjustable rate mortgage payments will vary from time to time. This oversimplification is part of the reason that we were so interested in the fixed loan option.

However, as more information came to light, we really started considering the variable rate mortgage as a viable option. While we hate the idea of not knowing exactly what will be owed every month, we did like many of the other attributes of the variable loan rate mortgage option.

The first thing that got our attention was the interest rate. Even though the rate is subject to change over time, the average variable rate mortgage loan offers interest rates that are lower than the fixed loan option. The lower interest is really appealing to many homebuyers but there are other benefits as well.

Since we knew that we wanted a pretty big loan, we were drawn to the variable rate mortgage. Since the interest rate is lower we have a better chance of getting a bigger loan. The lower monthly payments fit into our budget and we were able to take out more money for more house.

Also, we knew that we were going to move within the next few years and we knew that our income was going to increase. Since this is a starter home we decided to choose the variable rate mortgage. The possibility of a rate increase is lower if the life of the loan is shorter.

If you are getting your starter home that will be used sold within a few years and if you expect a significant raise over time, you definitely want to consider a variable rate mortgage, but before so doing, be sure to get as many mortgage quotes as you can.