Salt Lake City Real Estate Tips, Market Updates and

Local Happenings

By Real Estate Expert KathyOHomes

When any one talks about getting a home, they talk about interest rates. Getting a home in Greater Salt Lake City/Park City is definitely no exception to this rule. Most people want the lowest interest rate they can find when getting a mortgage, and if they find one that is very low, that's all they will be able to talk about for months. Over the dinner table, the main conversation will usually be about how low the interest rate is on the house. Lenders know that the interest rate is a hot topic amongst consumers. That's why there are adjustable rate mortgages and fixed rate mortgages. Both types of mortgages are very attractive for borrowers, but here is more of an explanation on adjustable rate mortgages. .

Early on, adjustable rate mortgages feature lower rates and payments for the term of the loan. Because lenders use this lower rate when seeing if borrowers qualify for a loan, borrowers are typically able to buy larger homes that they normally would not qualify for.

Also, if the borrower does not plan on staying in a particular home for a very long time, getting an adjustable rate loan is a cheap and flexible option. Furthermore, people who take out adjustable rate loans don't have to refinance the loan to get a lower rate. They don't have to pay an entirely new set of fees or closing costs to get a rate that is lower. Instead, borrowers simply watch their rates fall. As the rates fall, so do their monthly payments. One can see why getting a home in Greater Salt Lake City/Park City might be very affordable with an adjustable rate loan.

However there are some disadvantages to getting this type of loan that cannot be ignored. For instance, with an adjustable rate mortgage, rates can increase dramatically over the life of the loan. If rates rise sharply, the borrower may be quite surprised at how high the interest jumps. This may not be good because often times when the economy begins to go sour, home interest rates are the first things that start to go up.

Adjustable rate mortgages sometimes are not always that easy to understand. This means it's can be easy for borrowers to be mislead or get trapped by lenders who are a little on the shady side. Sometimes the borrower will end up owing even more money than they did at the time of closing. This can happen with what is called a negative amortization loan. In this type of set up, the payments are set to be so low that they only cover a part of the interest. Whatever is unpaid is then just rolled over to the principal amount.

Even though there are some disadvantages when it comes to getting an adjustable rate mortgage, you shouldn't let that discourage you from looking at this option. Choosing a home in the Greater Salt Lake City/Park City real estate market will most likely require that you consider all your options very carefully. Also, just like there are disadvantages to getting an adjustable rate mortgage, there are disadvantages to getting a fixed rate mortgage as well. Actually your best bet in either case is to enlist the help of a professional.

A real estate agent like myself who knows a lot about Greater Salt Lake City/Park City, can be a trustworthy guide in your purchasing process. You can reach me at my cell at 801-518-4599 or email me at kathyo@kathyohomes.com. There's definitely a home in Greater Salt Lake City/Park City that's just right for you!

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