#1
I am going to franchise a music store and I need help in my loan application. What is the advantage of fixed-rate mortgage? I am being offered two options in the credit union the other one is adjustable rate mortgage. The latter sounds appealing but some says fixed-rate is better. I'm not familiar with this terms because this is the first time that I will borrow money from a credit union. I need help in deciding. I hope this is not too odd to ask here.
#2
This thread could be good.

Fat Lard may actually be able to help you though
Quote by Skibolky
No one can really fuck with the power of empathy.
#3
wabbitsalad With mortgages you generally want to tend to pay them off as soon as possible to save on interest, but that's pretty basic. The fixed-rate one locks you in so that you're always charged the same monthly payments, whereas the adjustable rate can fluctuate more or less and is beyond my understanding of it. But here's a basic calculator for figuring out what you're ultimately paying, and how the amortization works. Notice the increasing amount of money that's taken away from the principal:

http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx?loanAmount=165000&years=30&terms=360&interestRate=4.50&loanStartDate=23+Mar+2017&show=true&showRt=false&prods=216&monthlyAdditionalAmount=0&yearlyAdditionalAmount=0&yearlyPaymentMonth=&oneTimeAdditionalPayment=0&oneTimeAdditionalPaymentInMY=&ic_id=mtg_amort_calc_amortization_btn


Here's an adjustable calculator to try and compare (not necessarily just total price though; say you want to save a little more money in the beginning instead to set up shop and just pay more for having that money now, etc.). It looks like there's a few common types you can choose from, and you'd have to see which ones the credit union has:

http://www.bankrate.com/calculators/mortgages/adjustable-rate-mortgage-arm-calculator.aspx


But really the best thing you can do is have an in-person talk with someone there. The fixed rate's advantage is that it's more predictable, but it's a bit beyond my understanding tbh
.
#4
Quote by wabbitsalad
I am going to franchise a music store and I need help in my loan application. What is the advantage of fixed-rate mortgage? I am being offered two options in the credit union the other one is adjustable rate mortgage. The latter sounds appealing but some says fixed-rate is better. I'm not familiar with this terms because this is the first time that I will borrow money from a credit union. I need help in deciding. I hope this is not too odd to ask here.

Also, big advice: get a tax-focused CPA BEFORE you decide you need one. That could help a lot for them, and especially you lol
.
#5
1. Never been a worse time to borrow $$ and go into the retail biz.  You will be on the hook to the bank whether you make it or not and most don't make it.  Got a rich uncle to provide the funds with no strings?  Go for it!  Avoid banks like the plague.

2. A fixed rate means you always know what your payment will be.  If you wish to avoid bankruptcy, this is a good choice.  A variable rate loan means they can charge you whatever interest they feel like after a certain period of time.  This only works if you can borrow short term and pay it in full very quickly.  Not recommended.

Ref:  I have been a business owner for 40 years and owned a retail dealership for 20.  I sold off my dealership in 2005 when the writing was on the wall.
"Your sound is in your hands as much as anything. It's the way you pick, and the way you hold the guitar, more than it is the amp or the guitar you use." -- Stevie Ray Vaughan

"Anybody can play. The note is only 20 percent. The attitude of the motherfucker who plays it is 80 percent." -- Miles Davis

Guthrie on tone: https://www.youtube.com/watch?v=zmohdG9lLqY
Last edited by Cajundaddy at Mar 23, 2017,
#6
Quote by wabbitsalad
I hope this is not too odd to ask here.


Not at all, a thread that's actually educational and not total shit
Quote by jrcsgtpeppers
There shall be a stop to this madness. The battle is not over. My tasty licks aren't going anywhere.

Quote by The_Blode
^ I've just realised if you say Simple Plan's 2011 effort "Get Your Heart On!" really fast in a Southern American accent, it sounds gross. . .like sexual gross!

Quote by Necroheadbanger
Hello.
I'm looking for professional bongo-ists and triangle-ists to make a Progressive Technical Brutal Death Metal band
(will be called AxOxJxLxAxIxVxXxUxWxZxQxUxRxWxGxJxSxAxLxKxMxNxHxUxGxAxAxWxVxCxBxZxVx)
(Don't even ask what it means)


https://soundcloud.com/95dank



#7
a fixed interest rate will lock you into something around the national interest rate which is set by the National Reserve Bank in Australia and presumably the Federal Reserve in the states (might be called Fed Funds rate?). This national rate fluctuates depending on how these banks want to nudge the economy. Kind of, but that'll do.

if you get a flexible rate it doesn't mean flexible as in "oh, you want to wait until next month to pay? sure that's cool" it means you ride the rate that the Fed is setting. So what is 1% today could be 5% tomorrow, which would cost you a lot of money. But you never know either, Japan have got a negative interest rate to encourage people to borrow money, invest in business and stoke the economy.

I'm with Cajun though, bad time to start unless you have serious backing. If the market goes south and you're in massive debt to the bank you're gonna be in big trouble.
#8
Google has a lot of good info. Basic difference is obviously one is a fixed interest rate and the other is variable. What that means in real terms is you pay a little more interest for the privilege of locking in your rate for a set number of years (you'll renegotiate your rate at the end of the term (usually 2-5 years on a house). You pay a lower interest rate with a variable rate but you add risk in that as the key interest rate of your country changes so will the rate of your mortgage. This usually happens gradually over time and so it's unlikely your payments will significantly increase just overnight. Typically it happens in quarter or half point increases. The US has increased rates twice this past year because their economy is strong but rates are still very low. Money is extremely cheap right now in most parts of the developed world but it's not likely to stay that way for long and so that might make a fixed rate your best option (also as a business owner it's likely good to have a fixed cost as well). You should really meet with a financial adviser before deciding.

As for whether it's wise to enter the retail sector these days is a different thing altogether lol.
#9
 I recommend to use the services of a Polish loan company. This is the biggest loan servicing for anyone (even for debtors). Also irrespective of the current situation you can get a low rate loan. All of course can be done over the internet.
http://www.concash.pl/
Last edited by wojtek333pl at Mar 24, 2017,
#12
I don't know why I'm the first to say it but having no understanding of credit terms is a good sign this isn't the time for you to make this move.

Obviously I hope you're a massive success and prove this wrong
#13
 We understand that expanding and growing your business is the dream of every entrepreneur. At times, you may require an urgent flow of finance to fuel the growth of your enterprise. Our Business loans  are http://maduraiweb.com/blog/historical-background-of-madurai designed just for that. Customized with Flexi EMI options, that let you pay as you grow. 
Last edited by Maduraiweb at Mar 27, 2017,
#14
>all these bots trying to get him to use their shady af loan sites
I like St. Anger. Ridicule me, daddy

Quote by ErikLensherr

REEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
#15
Good luck getting a variable rate loan to do anything but increase.
"A well-wound coil is a well-wound coil regardless if it's wound with professional equipment, or if somebody's great-grandmother winds it to an old French recipe with Napoleon's modified coffee grinder and chops off the wire after a mile with an antique guillotine!"
- Bill Lawrence

Come and be with me
Live my twisted dream
Pro devoted pledge
Time for primal concrete sledge

#16
Thanks for all the responses. I appreciate all the input because this is something huge for me. I am actually looking into finalizing my loan with a credit union. Their offer on mortgage loans california seems to be the best fit in terms of my current financial standing. But would a bank gives a better offer once they know about the credit union offer?
#18
Quote by wabbitsalad
Thanks for all the responses. I appreciate all the input because this is something huge for me. I am actually looking into finalizing my loan with a credit union. Their offer on mortgage loans california seems to be the best fit in terms of my current financial standing. But would a bank gives a better offer once they know about the credit union offer?

Always shop rates and use different institutions' offers as leverage against each other. Banks and credit unions are not your friend, so find the best deal.
#19
Go on Shark Tank.
I like St. Anger. Ridicule me, daddy

Quote by ErikLensherr

REEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE