Article: Fixed vs. Adjustable Rates
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Fixed vs. Adjustable Rates
Apples vs. oranges. Boxers vs. briefs. Dave Letterman vs. Jay Leno. These debates may rage on for decades, and we can add another one to the list: fixed vs. adjustable. We?re speaking, of course, of fixed rate and adjustable rate mortgages.
Let?s start the discussion by talking about risk. If I had to pick one word that explained the mortgage industry, it would be risk. If you can understand the concept of risk and how it relates to mortgages, you?re way ahead of the game. In a nutshell, riskier loans mean higher interest rates; you compensate the person lending you money by paying them a higher interest rate. If you have low FICO scores, this is a higher risk to the investor since you don?t have a good history of paying your bills on time, so you?re going to have to pay a h...
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