Selecting the home loan structure from your credit union or financial institution that best suits your family’s needs can be tricky as a new home buyer. Finding a dream home is something that so many of us hope for, but when we actually land upon that house, approaching lenders for financing can feel like running a gauntlet.

Lenders require credit report checks and extensive financial documents. There are so many variables that go into choosing the right repayment structure and mortgage terms for your new home that it can feel like an impossible task. But selecting a variable interest rate or a fixed-rate mortgage loan and the repayment timeframe is a crucial decision that can cost or save you thousands of dollars over the long term. Do your research now in order to make the best decision when selecting a lender, loan amount, and mortgage rate for your long term finances and happiness at home.

Why might you select a variable interest rate?

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Getting the best deal on a home loan for your dream home means starting early with your plan to become a homeowner. Lenders will expect your monthly payments to begin immediately, so timing is everything. Consulting a real estate agent is often a good idea when planning to buy a new home. Realtors are professionals in this field and are experts at navigating the lender-borrower relationship, as well as the down payment, credit score checks, and neighborhood evaluation so that you can find the dream home you’ve always wanted.

When you move from an apartment into your new home, you will want to time this for the end of a lease term. As well, you’ll need to begin saving for the overlapping and additional expenses that come with homeownership months in advance. A homeowner quickly learns the value of saving, but savings designed specifically to cover gaps during this moving period is crucial to finding success.

Likewise, finding the best home loan rates means planning ahead as well. A variable-rate might be the perfect way to take advantage of a depressed market — like the current state of the real estate and banking industry. The coronavirus has beaten down central bank interest rates all across the world, making variable rates an attractive prospect for the time being. A variable interest rate is essentially a mortgage rate that fluctuates along with the prime lending rate set by the federal government. At this current moment, that rate is low, critically low. However, variable-rate mortgages have a tendency to rise rapidly alongside the prime rate.

As the economic fortunes of the world turn around and head north with elastic momentum, we, as borrowers, can expect to see these variable rates rise as well. Choosing a variable rate for your home loan is dependent on your own vision of the marketplace’s future. If you see a horizon of continued economic stagnation, then choosing a variable rate is likely the best option. These conditions make for a continued decline in the interest that you will pay on your mortgage loan.

Take advantage of the savings.

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The savings that you can enjoy as a variable rate mortgage holder during a down market can create some unique opportunities to improve the quality of life enjoyed in your home. With a negligible interest rate, you can focus on your own happiness at home rather than obsessing over paying down the principal in order to reduce your debt burden.

Learning how to create a home theater complete with surround sound, game console plugins, Apple TV, a projector, and viewing seats, for instance, is a great way to make your house truly suit your family’s needs. Creating the perfect relaxation space with a home theater room with the excess savings will also improve the value of the house for a future reselling opportunity.

Lock in your mortgage with a fixed rate.

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Alternatively, if you believe that the market is poised for a major reversal then locking in the low rate with a fixed mortgage might be the better choice. A fixed-rate represents exactly what it appears to be. This is an agreed-upon interest rate that is not dependent on market conditions. No matter what the central bank rate does, you will pay the same interest rate for the life of the loan. This may provide a major benefit to you as a borrower. With the market teetering on a ledge, we may see a skyrocketing interest rate that sees variable-rate mortgages rise sky-high. In this instance, you will be locked in at today’s market price.

Choosing the right mortgage loan takes some thought and a lot of reading, make sure you take the time to evaluate your options and select the right plan for your family’s future.