I never realized how many little details can get in the way of making a final decision. This may not seem like a big deal to some. Buying a new home is a complicated process. In fact, I thought that we knew what we would choose ahead of time but the whole thing is much more complicated than I anticipated.

We would always know exactly what was owed on the loan each and all of the month and we wouldn’t have any surprises or mortgage sticker shock. The fixed rate mortgage seemed like the perfect choice. We loved the idea of having this security but as we did a little more relook the adjustable rate mortgage seemed like the right decision.

Even though the rate is subject to change over time, the average adjustable rate mortgage loan offers interest rates that are lower than the fixed loan option. The first thing that got our attention was the interest rate. The lower interest is really appealing to many homebuyers but there are other benefits as well.

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While we hate the idea of not knowing exactly what will be owed all of the month, we did like many of the other attributes of the adjustable loan rate mortgage option. However, as more information came to light, we really started considering the adjustable rate mortgage as a viable option.

The fixed loan payments do not change but the adjustable rate mortgage payments will vary from time to time. Basically, the major difference between the fixed and the adjustable rate mortgage is the steady monthly payment. This oversimplification is part of the reason that we were so interested in the fixed loan option.

Since the interest rate is lower we have a better chance of getting a bigger loan. Since we knew that we wanted a pretty big loan, we were drawn to the adjustable rate mortgage. The lower monthly payments fit into our budget and we were able to take out more money for more house.

Since this is a starter home we decided to choose the adjustable rate mortgage. Also, we knew that we were going to move within the next few years and we knew that our income was going to increase. The possibility of a rate increase is lower if the life of the loan is shorter.

If you are getting your starter home that will be used sold within a few years and if you expect a significant raise over time, you definitely want to consider an adjustable rate mortgage.

Happy Independence Day!

Wachovia quits offering risky mortgage loan
AP via Yahoo! News - Jun 30 2:49 PM Beleaguered consumer bank Wachovia Corp. said Monday it will quit offering a mortgage payment option that allows borrowers to pay less each month than the bank charges in interest.
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