The Advantages of Fixed Rate Mortgages
When considering the purchase of home, the most traditional mortgage option available to you is a fixed rate mortgage. This type of mortgage offers numerous advantages to home buyers.
- Same Payment Amount Every Month
- No Fear of Rising Interest Rates
Why Fixed Rate Mortgages are So Popular
One of the reasons fixed rate mortgages are so popular is the peace of mind they provide. Unlike adjustable rate mortgages, fixed rate mortgages maintain the same interest rate throughout the loan. In effect, you are able to lock-in the prevailing interest rate at the time of your home purchase. Regardless of whether you finance your home for fifteen or thirty years, you can rest assured your interest rate will remain the same throughout the duration of your loan. This means that in the event interest rates rise five or ten years down the road you won’t be affected. A fixed rate mortgage allows your monthly mortgage payment to remain consistent, further allowing for better budgeting.
The downside to a fixed rate mortgage is that should interest rates actually decrease at some point in the future you are locked into the higher interest rate unless you refinance your home. If you need to refinance, be sure to look for another fixed rate mortgage that doesn't require a lot of application fees.
It is also important to note the interest rates offered by fixed rate mortgages can be somewhat higher than those offered by adjustable rate mortgages. In a sense you are exchanging a slightly higher interest rate for peace of mind.
In the end a fixed rate mortgage is great
- For peace of mind
- If you plan to stay in your house 7+ years
If you decide a fixed rate mortgage is the right choice for you, MortgageLenders.org can help you locate a lender to get started quickly on the path toward home ownership.