If you’re stepping into the world of mortgages for the first time, the lingo used to describe all the different kinds of lending agreements available to you can be more than a little confusing. What are the benefits of a fixed rate versus those of a variable rate? What is a rate cap? And how can you determine which one of these is best for you? Here are the answers to all your basic mortgage questions in one short and simple guide.
Fixed rate. Fixed mortgage rates are most beneficial for homeowners who plan to stay in their homes for longer periods of time. Though fixed rate mortgages tend to have a slightly higher interest rate, the trade-off is knowing exactly how much interest you will pay on your home loan for the entire length of the term. If you struggle with budgeting your mortgage payment, this is a good option.