#1

Fixed rates are just that

in Warum es dieses Forum gibt und wozu ich das mache 10.09.2019 04:28
von Mims • 71 Beiträge

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The lender responds with an offer. Let’s say that they approve you for a rate of 9%. Guess what? The dealer, knowing that you know you have bad credit will try to convince you that you are approved at 12%. The 3% difference becomes nothing more than profit that the finance manager gets paid a commission on. Guess you pays for it… you. Your payments go up 10, 20, 30, 50 or even $100.00 per month simply because the dealership marked up the interest rate.


The truth is this. You can buy a car with bad credit with no down payment and also with lower interest rates by simply avoiding the dealer finance department altogether. If you know where to look and prearrange your financing (yes it’s done everyday), then you can have the confidence to walk into a dealership, pick out the car of your choice based on the amount the finance company preapproves you for and had the dealer a check. This puts the power of negotiating price in your favor.


Since the inception of mortgage loans, many different types of loans have been introduced. These include ARMs or adjustable rate mortgages and fixed rate loans, amongst many other types of loans. In addition, depending on your loan-to-value ratio and your credit rating, the type of loan lenders are willing to give you vary. Most typically, you will need to 20 percent down payment on a property, while the bank finances the other 80 percent.


If you go with an FHA “loan,” or Federal Housing Administration loan, they insure the bank by 100 percent for the loan amount you have with the bank. The FHA isn’t really the one giving you the loan, but they insure the bank to make the loan out to you. With an FHA, you can pay as little at 3.5 percent down payment of the purchase price of the property you intend on purchasing.


An adjustable rate mortgage, or ARM, is a loan with an adjustable rate. These home loan rates may be initially lower than a fixed rate. This rate fluctuates based upon the economic index the market and is regulated by the Federal government. This type of loan is also referred to as a variable-rate mortgage. There are limitations as to the charges that can be placed on this type of loan. The difference in the adjustable rate and the market rate for any given time is the index in addition to the margin.


Fixed rates are just that– fixed. These home loan rates are not tied to an index rate, but may be initially higher that an adjustable rate. The reason is that the adjustable rate takes risk away from the lender. The borrower’s rate takes into account the lender’s margin and thus reduces the risk. A fixed rate takes the guess work out of the payment amount per month for the borrower and thus poses more of a risk to the lender’s margin. These types of home loan rates do not change for the life of the loan.


A loan-to-value ratio is the amount borrowed in a loan compared to the amount the real property is appraised for or the amount of the property’s recent purchase amount, whichever of the two is less.

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