Strategies for Getting Started in Real Estate HTML version
Getting Stareted in Real Estate
mortgage, you can’t extend it by paying less. You must make your payments as
agreed. Usually you will get 1/8 of a percentage point lower on your interest rate
because the lender has the shorter period of risk exposure of 15 years, not 30.
Adjustable rate or fixed rate
Adjustable rates can go up or down. They are always lower than fixed rate loans
in the beginning because the lender has the power and authority to raise them if
the Federal Reserve raises its loan rate to the bank. Thus you’re betting that
interest rates won’t go up and you’re getting a cheaper percentage rate for the risk
you take in choosing that option.
Fixed rates in today’s rock-bottom interest-rate market just seem to be the best
way to go. You still must decide for yourself but for me, I’m locking in my right to
pay 5 or 6 percent forever. These are great rates—especially when you consider
that back in the inflationary 1980s, interest rates climbed above 17 percent.
Once again, there must be 50 different versions of interest rate programs. Those
are what can be called blended rates, so make your best deal according to what is
If you are not sure which way to go or don’t quite understand rates and
mortgages, go get a book on the subject and read all about it. The lenders will also
educate you on what’s available in the market.
This stuff is boring to the right-brained extrovert but it is a fact of life and
an important one too. When it comes to financing, bear down on it and
get through it. Make sure you do your best because you’re going to have
to live with the end results of your efforts or refinance later and pay more
All through my book, you will notice I don’t use all kinds of hypothetical math
equations to get my point across. The reasons for that are at least fourfold. First,
I’m right-brained. Second, real estate finance books can resemble phone books.
Third, all the time you spend understanding some wild finance method is
generally wasted because you won’t use it in real estate. Fourth, it’s dry as cat
litter and it’s no fun to read about math.