A variable rate mortgage, fixed-rate mortgage, or tracker loan is a mortgage in which the interest rate varies, either up or down, based on an economic index that is adjusted monthly. The loan can be offered at the current market rate for a certain period of time. At the end of the introductory period, the variable rate mortgage will revert back to its historical average rate. Many people choose to refinance a variable rate mortgage to lock in at a lower rate once they’ve paid down some of the debt.
These are good options for borrowers who need to reduce the payment amount for one reason or another but don’t want to risk losing their home. Borrowers can find several different fixed rate mortgages from a variety of lenders. They all have different advantages and disadvantages. For example, fixed-rate mortgages often offer better long-term payment options than do adjustable rate mortgages. Fixed rate mortgages also tend to offer higher interest rates.
On the other hand, variable rate mortgages give the borrower the flexibility to adjust interest rates according to inflation and other factors. They also allow the borrower to choose a fixed interest rate, with the cost of the loan being partially offset by the prime interest rate. Some people prefer adjustable rate mortgages because they can choose to pay the full interest rate over a longer period of time. Adjustable rate mortgages can be locked in at a certain rate for a specified period of time.
When you shop for your new mortgage, be sure to compare a range of loans so that you are able to select the best option for your unique situation. Shop for interest rates and loan terms online to get the most competitive mortgage offer possible. A good first step is to work out what kind of advantage you will have over potential competitors if you opt for a variable rate mortgage rather than a fixed-rate mortgage.
If you know you can afford a fixed-rate interest rate throughout your entire life, then you can look for a variable rate mortgage. However, keep in mind that this type of mortgage comes with its own set of disadvantages. One of these disadvantages is that variable rate loans come with variable interest rates. If the Bank of America or other lender rates go up, you may not be able to shift to a fixed-rate loan at the same lower rate. So this could potentially leave you paying more money over the long run.
Before you apply for a variable rate mortgage loan, make sure you understand the pros and cons of the different options. You should also make sure that you get the lowest fixed interest rate throughout your entire loan term. Here are several tips on how you can get a variable rate mortgage loan that has the lowest fixed interest rate throughout the term:
The choice of your Bank of America mortgage lender is an important part of your decision. When you shop around, take the time to find out as much information as possible about variable rate mortgages. Then, when you decide to apply for a loan, make sure that you work out a budget and allocate the funds you have available to pay each month.
With your budget in place, you can then use that money to calculate the amount you would like to borrow each month. This is where your interest-only mortgage loan will come into play. Your interest-only mortgage is when you pay interest only on the principal of the home loan while a fixed rate mortgage has a fixed interest rate throughout the loan. With your budget prepared and the loan amount in mind, you can then turn to Bank of America’s official loan application process. Once you’ve completed an application and have been approved, you can then focus on finding a home to call home.