The best mortgage is the one that fits your budget. Figuring out that best fit can be a challenge. Fortunately, White River Credit Union members have a partner that can assist them in reaching all their financial goals, and getting the right mortgage is a big step along that road.
What is a Fixed-Rate Mortgage?
A fixed-rate mortgage, sometimes called a “traditional” or “conventional” mortgage, is just what it says, a home loan in which you and the lender agree on the interest by contract and it doesn’t change for the life of the loan. By contrast, a variable-rate mortgage has built-in flexibility, the lender adjusts the rate at predetermined periods based on outside factors which can work in the borrower’s favor or not.
What Are the Benefits of a Fixed Rate Mortgage?
- Your interest rate is locked-in, you know what you owe each month. If rates drop, you can refinance (refi) but, if rates rise, you just smile and get on with life.
- Mortgage or refi proposals with fixed rates are easier to compare among lending institutions.
- No prepayment penalties — extra payments are usually allowed without additional fees and the extra money repays principle, potentially shortening the length of the loan.
- Fixed-rate contracts often have more options — your loan term can be 10, 15, 20, 25 or 30 years.
- If the mortgage payment doesn’t rise but your income does, you have, in effect, a lower loan payment.
How Do I Qualify?
Getting a mortgage depends on many factors:
- You’ll need a down payment. Putting 20 percent down is great if you can. If not, some lenders will take as little as 3 percent.
- You’ll need a qualifying income-to-debt ratio. For example, “Your house payment should be no more than 25 percent of monthly” income is a common rule of thumb.
- You should have a strong credit history and a stable income. If you’ve borrowed before and repaid on time, if you have a good job that is likely to continue, you’re a better loan candidate.
- Having a cash reserve allows you to meet basic expenses in case of some disaster.
I Need Help Getting My Mortgage
The Enumclaw Plateau economy is driving more home sales and offering refinancing options many homeowners are considering. White River Credit Union provides checking & savings accounts and many other services. Contact us today and get started on owning your own home or strengthening your overall financial position.