Fixed Rate Mortgage

Fixed Rate mortgage is actually the most simplest mortgage option available to the users. It is the type of mortgage where interest rate is set at the time of the issue of the loan and will not change through the life of the loan unless the loan is refinanced.
Depending on your needs and long term goals as a home buyer, decide if fixed rate mortgage is the right loan option for you or not. The type of loan is helpful for the borrower in case the interest rate go up fairly insignificantly. The type of mortgage guarantees a certain interest rate for a period of time. The most popular fixed mortgages are 3,4 and 5 years. However, you can have a fixed mortgage for as short as 6 months or as long as 10 years.

Usually a large majority of people opt for fixed rate mortgage. The best thing about the type of mortgage is the guarantee of the amount of fee you will be paying. Though, in long run say for example 5 year unless interest rates are steadily climbing, you will be paying more interest costs for the over the life of your mortgage. Thus, fixed rate mortgage is suitable in two cases -

  • When interest rates are staying fairly stable or are falling.
  • You should have a mortgage lender who will allow you to lock in to longer term mortgage if rates go up without a penalty.

Although, there are various other various other mortgage option available for the users, fixed rate mortgage is suitable for the ones who are looking for predictability and stability. Also, it is good to have predictability if your living on a fixed income. However, it is important to compare the price and interest of each product in order to find the best option under fixed rate mortgage.