NOLA Lending
   Your Loan, Your Way

Call Us Now         
985 612 2784

Posts Tagged ‘rates’

You don’t have to go very far to find the news that mortgage interest rates are at historic lows.  And with rates this low, common sense might tell you it’s time to lock in that low fixed rate loan, right?

Not so fast!

Remember that when fixed rates are low, that means adjustable rates are even LOWER!  So that attractive 4% fixed rate might look good, but a 2.5% adjustable rate might look even better.

So now that we’ve established that low rates also apply to adjustable rate loans, let’s take a closer look at the factors that might help you determine if an adjustable rate loan is right for you.

What is an adjustable rate mortgage?

A variable-rate mortgage, adjustable-rate mortgage (ARM) or trackers mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets.

Basically what this means is that the borrower benefits from reduced margins to the underlying cost of borrowing compared to fixed or capped rate mortgages, allowing adjustable-rate mortgages to be a great way to save you money today.
Benefits of an adjustable-rate mortgage include:

• Statistics show that adjustable-rate mortgages owe back less over time than traditional fixed-rate mortgages.
• Mortgage maturities can be applied for up to 25 years instead of the 10 year maximum for traditional fixed-rate mortgages.
• Adjustable-rate mortgages allow the borrower to pre-pay principal (or capital) early without penalty.

Adjustable – as the name implies, are flexible to your financial needs. In this ever changing financial climate, secure yourself with a mortgage that can flex and change to keep up with your ever changing life.

3 signs an adjustable mortgage rate might be right for you

• You need the lowest possible payments for your mortgage over the short term.  If money is tight, or you would like to put a plan in place to save the maximum amount on your mortgage payments than an ARM might be the right choice.
• You may be transferring or selling your home in the near future.  ARMs offer the lowest mortgage payment options over the short term, so if there is a good chance you will be selling or moving before the fixed term ends an ARM makes sense.
• You need flexibility of terms.  A fixed rate mortgage is just that – fixed.  But there are several choices with ARM loans including 1, 3, 5 and 10 year fixed rates that can suit a variety of needs.

Choosing between an ARM and Fixed Rate

It can be a daunting experience when considering a new mortgage. Whether you are looking to refinance or to start a new mortgage, where do you start looking? With a multitude of mortgages, technical jargon, and everyone trying to commit you to monthly repayments, it’s hard to know where to turn for help.

The best advice I can give you when shopping for a mortgage is this:

• Research the different options available to you.
• Always ask questions if you are unsure of what is currently available.
• Develop a relationship with a mortgage lender.  If you simply shop around all the time you may simply get a quote.  But a good mortgage lender can be like a financial advisor and give you advice you NEED to hear instead of what you WANT to hear.
• Don’t be scared to say, “No, this isn’t right for me.”

NOLA Lending will never steer you into a mortgage we are certain won’t meet your exact needs. One of our examples of a mortgage which might be of interest to you is the adjustable-rate mortgage.  The lower initial payments seem great, but for some borrowers it may not make the most sense.  Our job is to provide you with sound advice based on our experience to help you make this decision.

If an adjustable-rate mortgage is not the right solution for you, fear not. We have a mortgage solution for everyone.  Just ask NOLA Lending how we can help you today and one of our friendly advisors will go through each option with no obligation.

How do I apply for an adjustable rate mortgage?

If you do decide an adjustable rate mortgage is right for you – NOLA Lending is proud to offer a wide range of adjustable-rate mortgage services to meet your specific requirements. Whether you are a first time or current homeowner, NOLA Lending is confident they can find the right refinancing, or adjustable-rate mortgage to suit your needs.

Why not contact one of our fully trained members of staff today to find out how you could save money by switching to an adjustable-rate mortgage today?

It is important for anyone who is considering obtaining a home mortgage to learn how to calculate monthly mortgage payments or the amount of money you pay each month to buy your home. A variety of factors play a role in what this cost will be, including your interest rate, the length of the loan, your creditworthiness and the current lender’s requirements. 

More complicated than you might think

The problem with learning how to calculate monthly mortgage payments is that the process is pretty complex mathematically. In short, your loan is not the principle borrowed amount divided by the number of monthly payments. However interest plays a significant role in this process.

The real issue is that the interest on a mortgage loan is compounding, which means that it applies to the current balance of the loan. Also important is the fact that most of your monthly payment starts out with being interest payment while over time, the percentage you pay each month increases until you are paying nearly all principle.

Making It Faster

So, how can you calculate the monthly mortgage payment you are likely to pay? A good place to start is with a mortgage calculator. Many of these can be found online and are free of charge. None of your personal information is gathered in this process, and all you will just need to enter the terms for a loan you are considering and it will do all of the mathematical work for you.

This method does allow for individuals to get information right away as it does give you an instant quote on basic amounts and rates. It will also allow you to:

• Compare how much of a difference a down payment makes on the loan.
• You can determine how paying over a long period, or a shorter period can affect the monthly payment
• You can compare the interest rates of various loans provided to you by lenders

Nothing beats personal advice

The good news is that an online mortgage calculator is easy to use and can provide you with an estimate about the loan you hope to get. However, be very cautious with the information you find online as it may not apply to your specific situation.

Things to watch out for with online mortgage calculators:

• These online calculators may or may not accurately apply things like taxes, home owners insurance and other fees such as condo dues
• You may not accurately judge the rate you qualify for
• Mortgage insurance may vary depending on the type of loan
• Rates fluctuate daily

Our best advice is to speak to one of our helpful team members and get an exact quote and payment estimate for the home you want.