What Are the Benefits of a Flexible Mortgage Texas, California ?

What is a flexible rate mortgage Dallas TX: Concept of variable rate mortgages

What is the concept of variable rate mortgages? Many times borrowers go for a loan product that is called HELOC or Home Equity Line of Credit.  Some of those situations could be that you are going for home renovation. The contractor has given you a time frame and an amount budget as to what all it would take to renovate your home. However, we all know that we may also have to be prepared for contingencies. What if the budget exceeds or takes a bit longer on time that was forecasted or would you be buying everything that is needed, all on the same day or not in terms of materials.

Benefits of a Flexible Mortgage: Dallas Tracker Rate mortgage

Some times borrowers would like to go for HELOC product. It's like a credit card being given to you with a specific line of the amount from where you can borrow and like a credit card, you incur interest on it only when you spend the money out of your line of credit. If you don’t spend, the line of credit is still available to you but you are not incurring interest.

The drawback of the system is that the rates are variable and hence the mortgage payments vary month to month. Typically the rates hinge on the prime rate. In 2017 as we are aware the rates are inclining so one should reasonably be prepared that if the rates go up he should still be in a position to make his housing payments.

The advantage is that the borrower doesn't incur interest unless he spends the amount from his line of credit. 

What is a tracker rate mortgage?: California, TX

In 2008 when the property prices fell. There were many borrowers who had an open line of credit where in they had not used their line of credit and the money was still available to them but there was no collateral or home value supporting the line of credit. Banks had to withdraw in many cases or curtail the amount of money a borrower could borrow in that market situation. 

It truly is up to the borrower as to how he wants to manage his finances. As an example, a borrower borrows let's say $ 100,000 @ 6% interest on a variable rate for 15 years. His monthly mortgage payment for the 1st month would be $ 843.86. If the rates increase the next month to become 6.25%. His monthly payment would be $ 857.42. 

However, there is nothing stopping a borrower to make higher payments to get rid of the mortgage. There may also be some riders, so it's better to speak to an expert before considering such options.

For more information visit www.affordable-payment.com or call 323-705-3191 if you are a California Mortgage borrower or If Texas Mortgage Borrower call 713-463-5181 EXT 154