3-year fixed mortgage rates explained for Fort McMurray Home Owners.
Most Fort McMurray mortgage customers have a 5 year fixed rate mortgage. However, many would benefit from a 3 year fixed rate mortgage.
What is a 3 year fixed rate mortgage?
The three year fixed rate mortgage is one that has a fixed rate mortgage for three years. This isn’t the same thing as the amortization period, how long it takes to pay off the mortgage. You could in theory have a 30 year mortgage renewed for 10, 3 year periods. You’re committed to meet the mortgage terms for three years. For example, you’d have to pay a penalty for refinancing the mortgage or breaking it in year 2. However, there are cases when a three year fixed rate mortgage makes sense.
Comparing 3-year fixed mortgage rates
When is a three year fixed rate mortgage a good idea? If you think interest rates are going to fall in two or three years, a three year mortgage term is a good idea. You’ll have a more predictable mortgage payment than an adjustable rate mortgage. Nor will you have to pay a penalty to refinance in three years. On the other hand, if interest rates are rising, you’ll want a longer loan term.
A three year mortgage is a reasonable choice if you may be upgrading your home in a few years. If you’ve bought a starter home but may be moving in two or three years, a 3-year mortgage is a better choice than a 5-year mortgage. If you decide to stay, just renew the mortgage. If you’re switching mortgage providers, you will generally have a lower premium if you switch to a three year mortgage than a five year mortgage since this is lower risk for the lender.
How Popular Is the 3-Year Fixed Rate Mortgage?
Around a fifth of all Fort McMurray mortgage holders have a mortgage with a two to four year term. This customer base skews younger, whereas older mortgage holders are more likely to stay in their current mortgage. Younger Fort McMurray mortgage holders have greater risk tolerance and less need to lock in lower interest rates. Call us your Fort McMurray trusted mortgage brokers to lock in your mortgage rate.