Re: mortgage contingency clause/prevailing interest rates

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On 7/10/07, Kenneth C. Krause wrote:
> The printed "broker drawn" contract contained the phrase
> "prevailing interest rate" in the mortgage contingency
> clause. I claim this protects the purchaser and he need not
> take a mortgage beyond the current prevailing rate range (
> in this case 61/2- 7&37;. Any thoughts would be greatly
> appreciated.

Since most home loans are for a period of 30 years, if you
want a payment you can count on for that long of a period of
time, a fixed rate mortgage may be what works best for you.
Once your loan amount and interest rate are calculated and
locked in, a fixed rate mortgage will guarantee that you will
have the same payment over the life of the loan. Making extra
payments to principal will allow you to pay your loan off
sooner mortgage lenders

This may not always be the best choice, however. If interest
rates are very high at the time you take out your loan, with a
fixed rate mortgage you'll be stuck with that high interest
for the life of the loan (unless you choose to refinance).
Conversely, if interest rates are very low, you'll come out
the winner with interest rates that will stay low no matter
how high interest rates go in the future.

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