Interested in getting an investment loan for some real estate in Texas? Loans differ from person to person, and the investor of your real estate loan needs to understand what your needs are before you can finalize the deal. Investor loans in Texas come with two rate term options—fixed and variable. Here is a simple guide to help you decide which term rate is best for you.
Fixed-Rate Loan
A fixed-rate on investor loans will stay the same for the whole term, no matter how much market rates change during that time. How much the payments will be will depend on what the interest rate environment is like when you take out the loan. A fixed loan will stay at whatever the interest rate was at the time of the loan was made, so you will know what you will pay, in total, over the life of the loan. Fixed rates are common for student loans, mortgages, auto loans, and unsecured personal loans.
Variable Rate Loan
With a variable rate loan, the interest rate on your loan will change every time interest rates on the market change. This means that your payments will vary the entire time the loan is in effect. The variation in the rate will continue while payments are a combination of principal and interest. Variable rates are typically attached to changes to what’s called a well-known index, which is the variable-rate the loan will be charged to. The variable includes the interest the bank will charge and the rate the charges will vary over time (usually on a monthly basis).
What Is the Best Choice for You?
Figuring out which rate is for you depends on what your situation requires and how flexible you can be regarding payments. A fixed-rate is a better choice if, for example, interests are low at the time, but are about to rise. You’ll also want a fixed loan if you prefer to know exactly what your monthly payments will be over time, or if you are going to pay the loan over a long period of time, say 10 or 20 years.
If, on the other hand, interests are declining, then you might want to consider a variable interest loan. A variable loan is also ideal if you want maximum savings, are flexible enough financially to make higher monthly payments, or you’re going to pay the loan off in a short period of time (10 years or less). Talking to lenders for a real estate investor can be helpful in making a final decision.
If you would like to find out more about interest rates for loans, contact Investor Loan Source via website, email, or phone today.