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 The best home mortgage financing option
  Not getting locked into a high home mortgage rate
By the EchoBay Loans Expert
 The best home mortgage financing option
Dear EchoBay Expert: My wife and I are planning on buying a house but we don't know whether a fixed or adjustable rate mortgage is the better choice. Her job may transfer her outside our state of Florida in the next few years but this is not definite. What is our best home mortgage financing option?

Dear Loyal Reader: Since you don't know whether or not you'll be moving within the next few years, if your main concern is whether or not your payments will increase if rates go up, you may want to opt for a fixed-rate mortgage. This will help protect you from a substantial payment increase if rates rise in the future.

However, if you plan on moving to a new home within the next few years whether or not your wife's job in Florida comes through, an adjustable rate mortgage may be your best home mortgage financing option. Another factor to consider is your current cash flow.

An adjustable rate mortgage will give you a lower initial interest rate, providing you with a lower monthly payment at the beginning of your mortgage term.

It's important to remember that just because you opt for an adjustable rate mortgage now, doesn't mean that you won't be able to change that in the future. If you opt for an adjustable rate mortgage and you learn that your wife won't be transferred, you can always refinance into a fixed-rate mortgage at a later date.

 Not getting locked into a high home mortgage rate
Dear EchoBay Expert: Home mortgage rates keep moving up and down and it looks like the owners of the home I made an offer on will be accepting my offer soon. What can I do now to ensure I don't get stuck with a higher rate in a few weeks when I'm ready to apply for financing on my home mortgage?

Dear Loyal Reader: Just because the sellers of the home you want to purchase haven't yet accepted your offer, doesn't mean that you can't get the financing ball rolling. Some lenders will lock in your interest rate when you apply for pre-approval of a home mortgage, and this can protect you from unstable interest rate hikes.

Don't be surprised if your lender charges a fee to lock in your rate; some lenders do and the rate charged will vary. You also need to remember that if you lock in your rate with the pre-approval, you will need to make sure that you close the loan within the lock-in period or you'll lose the protection offered by the lock in.

Just be aware that if interest rates go down, you're going to be locked into a higher rate, so make sure that guaranteeing the current interest rate is really what you want to do before you decide to lock in any rate. You may also want to consider a lock in that will allow you to float your rate down one time during the lock-in period in case rates do drop substantially.

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Avg. National Rates
30 Yr Fixed 5.78%
15 Yr Fixed 5.39%
1 Yr ARM 4.80%
WSJ Prime 6.50%
Fed Funds 3.50%


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