Why 5/5 Mortgage Rates in Portage MI May Be the Best Way to Go For 2016

5/5 Mortgage Rates in Portage MI have become extremely popular because they are sensible, practical, and properly structured for long-term financial change. Strictly fixed mortgage rates have their benefits, as many Michigan homeowners have reaped from in the last few decades. 5/5 mortgage rates may be a different thing entirely, as they account for systematic financial change.

Adjustable-rate mortgage loans are attractive due to the lower interest rates. The interest rates begin lower, generally. The drawback is that they can fluctuate, and adjustable-rate loans typically forego the consistency and stability of a fixed rate. Of course, this works on the other end. As stable as fixed mortgages are, they stabilize a base interest rate that may be a bit higher on average.

The 5/5 mortgage rates in Portage MI seek to find a middle ground. The mortgages are often rather stable, but they also come with lower interest rates. How is this balance achieved? A 5/1 will revisit the rate after every year. There are also a few providers offering an 8/5, but it is far less common. The dual-approach manages to be stable while keeping interest rates lower. Yet, it still encompasses that basic gamble: will interest rates be lower or higher in five years time?

The rate essentially dictates that the interest amount is fixed for a five-year period. This is where the “5/5” portion ratio arises from. This borrows more of the principles of a traditional fixed rate mortgage, including the stability. After five years, the rate is revisited. It is then adjusted based on interest rates at the current time.

Now, 5/5 loans will have similar achieved interest rate caps as traditional loans. This helps protect a consumer if, for one reason or another, an interest rate spike occurs. A typical rate cap is about 3%, but it fluctuates. The important thing to remember is that 5/5 rates also have many of the same protective buffers.

Contact Kalamazoo Mortgage for further details on mortgage rates, including the specifically outlined details of a 5/5. Consumers can also receive a 5/1, which is a slight spin on the traditional mortgage rate mode.

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