If there is one thing that home buyers could use more of, it’s certainty. The financial world is notoriously unsure. Investing money in a business can be a boom or bust proposition. Trying to flip real estate might work well or lead to disaster. Almost everything comes with risk.
Should buying a home be risky?
Home buying shouldn’t be this kind of experience, though. Most people today are buying homes because they think purchasing that home will lead to more financial security. In many respects, they are right, especially if these people are able to purchase a home with a fixed rate loan.
Today’s home buyers are looking to visit NPBS for fixed rate home loans. Lenders like this give home buyers the certainty to know precisely what they are going to owe over the course of the loan. Monthly payments will be certain, giving these individuals the ability to budget their lives moving forward.
For a young person who might want to get started with a real financial future, this kind of certainty is priceless. It only comes for those individuals when they make the smart choice to go with a fixed rate, and leaves them with room to grow their careers and families without additional stress.
Variable vs. Fixed: Cost vs. Security
Some argue that it’s best to go with a variable rate loan. They argue specifically that variable rate loans allow people to take advantage of lower future payments. If you have full confidence that rates are going to go down in the future, then perhaps this approach makes sense.
The problem is that it is very difficult to know what interest rates are going to do in the future. Interest rates on homes are a function of many different factors, most of which are not in your control. While you might think it’s a good idea to take a chance in this regard, many young home buyers come to understand that taking these sorts of risks is not wise.
Fixed Rate Mortgages 1: Variable Rate Loans 0
Home buying should be a secure process that helps the prospective home buyer sink some of his money into a stable asset. This is the purpose of the mortgage, and it’s long served home buyers well. With fixed rate mortgages, this becomes much easier.
Buying a home is a major decision that one should only undertake after looking at many relevant factors. While there may be some people who decide that the risk of a variable rate loan makes sense, most find that fixed rate loans are easily the better choice, esp. if interest rates start to rise.
And remember, not even Janet Yellen can tell you what interest rates will be next year or how much they will rise in 5 years!