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If you’re considering a variable-rate, be sure to choose us to help you find the lowest rate on the market today.
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What Is a Variable-Rate Mortgage?
When a mortgage has a floating interest rate, it is called a variable-rate mortgage. The interest rate can vary from month to month or year to year based on fluctuations in the market.
With a variable-rate mortgage, you’ll typically see your rate broken down into two components:
- Prime lending rate (the rate set by national banks)
- Additional interest rate
Your overall mortgage rate will adjust according to the prime rate. If prime increases, so too does your mortgage rate. If, however, prime decreases, then you’ll be able to enjoy the savings from a lower interest rate.
Variable-Rate Mortgages V.S Fixed-Rate Mortgages
Whereas a variable mortgage rate will change with fluctuations in the market, a fixed-rate mortgage always stays the same. With a fixed-rate mortgage, your interest rate always stays the same, locked at whatever you agreed upon in the terms of the loan.
Unlike a variable-rate mortgage, fixed-rate mortgages do not always come with a five-year agreement term. A fixed-rate mortgage can last one year, two years, or even ten years before having to be renewed.
Fixed-rate mortgages tend to be the most popular option since they pose a lower risk for borrowers. Of all the mortgages in Idaho, nearly three-quarters of them are fixed-rate.
Variable-rate mortgages may be less popular, but they are no less worth considering. They may be prone to market fluctuations, but they also usually offer a lower overall interest rate, as lenders tend to view them as less risky.
How Does a Variable Rate Mortgage Work?
Variable-rate mortgages usually come with a five-year fixed term length. During those five years, your payments will always stay the same from month to month. What will change is where your money is spent: With a higher rate, more of your money will go toward paying off the interest. With a lower rate, more of it goes toward paying off the principal balance, in turn shortening your amortization period.
Save Money with Our Variable-Rate Mortgage Brokers
Choosing a broker from The Mortgage Specialists promises long-term savings for you. When it comes to variable-rate mortgages, we shop some of the most competitive mortgage products on the market today. We scour the industry to find the best deal for you, making sure that you get the lowest variable mortgage rate available. With our help, you’ll take those home buying dreams and turn them into reality. All with more money to spare.
Discover the Best Mortgage Rate Available
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We’re happy to answer any questions you may have about our services, our broker rates, and what we can do to save you money. We’ll give you all the information you need upfront so that you can feel confident in your choice to go with us as your mortgage broker.
To speak to a member of our team, be sure to contact us today.