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Sunday, September 11, 2011

Home Buyer Tip: A Fixed Mortgage Does Not Mean Your House Payment Is “Fixed”

When one thinks of a mortgage payment they often think of “PITI” (pronounced pity).   Adjustable rate mortgages got a lot of people in trouble so fixed rate mortgages is where buyers head these days.

But, a fixed rate mortgage does not mean a fixed payment forever.

Basically, your mortgage payment consists of a small portion that goes toward the original amount borrowed (principal), interest (in a fixed mortgage this is a fixed interest percentage), taxes and insurance.

Of these PITI components, the tax and insurance costs are not fixed.   Rarely have I ever seen either of these go down either.

Buyers should understand that although the principal and interest are major components of the mortgage payment, there will be variability down the road as insurance rates are adjusted as well as the tax rates change as they always do! 

Another thing to keep in mind - Consider association fees when purchasing a house or condo in Florida.

Understanding the current costs iincluding acquisition costs (closing costs) as well as the future costs (fixed and variable) up front will enable home buyers to make a smarter purchase decision.

Finally, a bit of unsolicited personal advice - just because you are approved to a certain amount does not mean you must spend that much!

If you are considering a home purchase in Brevard County, Florida, call me at 321-693-3850 or email me if I can assist you in any way!


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