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Guide to Home Loans and Rates Home loan and home refinance options offer a diversity through different mortgage products. It is important for consumers to know what the basic options are so that they can make a good decision, and be able to evaluate which products suits your needs more closely. Home loan options are basically the same as the options in refinance home loans. Whether it is your first mortgage or your third refinancing, the interest rates and terms that are offered stay the same. The factors that determine your offer are the same too, and this include loan to home value, credit score and history, debt to income ratio, and income. You will be offered mortgage products with varying rates and terms based on these factors. The first mortgage produce is the fixed rate home loan and refinance home loan, and this has a single interest rate which does not change for the terms of the loan, until the loan is either repaid or refinanced into a different loan. This type of home loan has a higher mortgage rate than the introductory rate on an adjustable rate loan. But this type of home loan is more stable and predictable and reasonable based on current rates. If you want a secure type of loan, then the fixed rate home loan is for you. People who plan to be in their home for some time should get a fixed rate home loan.
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Another home mortgage and home refinance option is the adjustable rate loan. For a limited amount of time like one, three, or five years, this type of loan has a fixed rate. When then fixed rate has expired after the time limits, the rate is adjusted according to the schedule in the original mortgage. The new rate is determined by the current mortgage rate market. It could be higher or lower.
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The refinance mortgage rate for adjustable rates are less appealing since they are not very stable. When corrections are made, the mortgage payment may increase significantly. You will only know the mortgage payment while you are still in the fixed rate term. Even if adjustable rate mortgage is quite unstable, there are reasons why it is good to use it than the fixed rate mortgage. They are cheaper during the adjustable period, and so it can be more affordable if you do not plan to stay in your home for a long period of time. You can enjoy this low payment while you are building your credit rating so you can qualify for a better fixed rate mortgage. To be able to evaluate your mortgage and home financing value, seek advice from a reputable lender, get quotes and compare them against you budget and future plans.