September 13th, 2018
Buying a home can be exciting. The process of finding the right home, making an offer, and eventually moving in is one that nobody forgets. But the financial side of the process can be much more stressful and confusing. Finding the right mortgage loan will be one of the most important steps that you take, but is often more work than homebuyers expect.
With that in mind, the simple fact is that learning more about the loan options can help you buy with more confidence. And for most home buyers, a fixed rate mortgage is likely to be the best mortgage option available. Luckily, it's easy to understand the basics of these loans.
What Is A Fixed Rate Mortgage
As its name suggests, a fixed rate mortgage is a type of mortgage loan that has a set interest rate that never changes over the life of the loan. This means that your monthly payments won't change, your interest rates won't change, and you'll have a clear idea as to how to fit your mortgage into your budget at all times. This is in contrast to ARMs - Adjustable Rate Mortgages - that have interest rates that can change over time and change your monthly payments along with them.
In most cases, you'll have 15 or 30 years to pay off your mortgage. You'll agree upon the terms and the length of your mortgage when you receive it. It's important to choose one that fits your specific needs.
Pros And Cons Of The Fixed Rate Mortgage
There are a few pros and cons of using a fixed rate mortgage. Here's a rundown of the main advantages offered by this type of loan:
Stable monthly payments
Make it easy to predict monthly expenses and fit your loan into your budget.
No risk
Your loan payment won't rise to levels so high that you struggle to make them.
15 or 30-year terms
It's easy for you to select the loan option that fits your needs and your budget.
You can take out your mortgage with more confidence.
Potential Drawbacks
Like everything else in life, fixed-rate mortgages have potential negative attributes. Study them before jumping in.
The interest rates are fixed
Higher than the initial interest rates on an ARM would be. For longer terms, you will pay far more than you would for shorter terms.
The bottom line here is that fixed rate mortgages are generally the best option for those who are planning on staying in their home for years to come, thanks to the stability that they offer. This is why they're the most popular loan option for homeowners.
Getting your Loan
Getting the right loan for your needs is important, and shouldn't be a huge hassle that you struggle with. Contact a local mortgage team today to get the loan you need without the hassle.
