Finding Fixed Mortgages
One of the most popular options is a fixed-rate mortgage. A mortgage with a fixed interest rate can run anywhere from one to thirty years and offers the homeowner a great degree of predictability and safety. Considering the obvious returns on the fixed mortgage, it has some shortcomings as well that should not be overlooked. By educating yourself about both the pros and cons you can make the best decision as to whether a fixed mortgage is for you.
Residential loans which provide the same interest rate for a predetermined term are referred to as “fixed mortgages.” They are usually either 15 year mortgages or 30 year mortgages. A 30 year fixed mortgage will provide you with more money left over each month than a 15 year mortgage. However, the longer the mortgages, obviously the longer you will have to pay it back. With a longer mortgage term, you’ll be paying much more interest over the life of the loan.
There are some fixed mortgages that only offer a fixed rate for up to 12 months. These are typically offers designed to attract new customers who would otherwise have difficulty qualifying for a mortgage. Adjustable rate mortgages usually start out with a low interest rate, but these “teaser” rates usually don’t last for long. After the expiration date of the interest rate occurs, your rate can go up and down as the housing market fluctuates. The unfortunate reality is that this is rarely something to be desired. The major drawback of a fixed mortgage is that when the property value falls due to market trends, it will not be profitable for you. If you have an adjustable rate mortgage, the current economic status of the housing market will highly influence rate figures.