Like many residential mortgage lenders, WEI Mortgage Corporation offers a wide range of financial tools that can be customized for individual customers. Recognizing that each home buyer has unique financial needs, WEI Mortgage Corporation recently began offering custom-term mortgages that are unique to each borrower. While the most popular are still fixed-rate mortgages, home buyers may also choose adjustable-rate mortgages. But what is the difference?
Just like it sounds, a fixed-rate mortgage has an interest rate that is fixed over the life of the loan. Many consumers like this feature because they don’t have to worry that their monthly interest payment will skyrocket. However, this certainty comes at a cost. It will usually take longer to build equity because interest payments make up a large share of the payments at first, when the principal on the mortgage is large. In addition, monthly payments are generally higher, and the home buyer often ends up paying more in interest over the long term.
Some home buyers try to get around these disadvantages by seeking an adjustable-rate mortgage. The interest rate on these mortgages will vary with market prices, so customers risk seeing their monthly payments increase steeply. However, the payments are usually lower than fixed-rate mortgage payments, and borrowers can usually obtain larger mortgages if they agree to a variable rate.