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You probably already have your
reservations about which type of interest rate you like,
variable (adjustable) or fixed rates. In fact many people get
immediately turned off by adjustable rates when there is little
to be afraid of if you know what you are doing. You can actually
save tens of thousands of dollars over the life of a loan with
an adjustable rate. The reason is they always start out lower
than a fixed rate and usually the earliest they would hit parity
with a fixed is in 3-5 years. That doesn't mean they will ever
hit parity and that doesn't mean the rate will not keep
increasing either. They may increase up to their cap which is
generally in the neighborhood of 11-15%. With variable rates it
is a good idea to follow the interest markets from time to time
to see which way things or going. Fixed rates are always popular
when interest rates are low in general because you can lock in
for the life of the loan and not have to follow the market as
closely. The disadvantage to a fixed rate is that these loans
offer very few options and you are somewhat stuck with what you
get initially.
Types of Variables
- Home Equity Line of Credits are almost always variable
- Some traditional 2nd's
- Stated Income Loans
- Bad Credit Home Equity Loans
Types of Fixed
- Traditional 2nd's
- Some Bad Credit Home Equity Loans
- Many 1st Mortgages
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