Borrowers typically opt for fixed-rate mortgages, which provide a predictable and stable interest rate throughout the loan term. On the other hand, adjustable-rate mortgages (ARMs) fluctuate according to market conditions; this uncertainty can cause borrowers to make hasty decisions that could end up costing them money in the end.
What Is a Fixed-Rate Mortgage?
A fixed rate mortgage is an American home loan that features an established interest rate and fixed payment amount for the duration of the loan. These mortgages are widely used throughout the U.S.
Fixed-rate loans feature amortized interest, meaning you pay less in interest and more in principal during the initial years of ownership. However, borrowers also have the option of getting a non-amortized loan with no fixed interest rate.
Fixed-rate mortgages offer a range of terms, such as 30- and 15 years. The 30-year option is often the most popular choice as it allows you to lock in an affordable rate for the long haul.
Selecting the Appropriate Term
Your loan term is another important factor in calculating how much you’ll pay. A longer loan term offers lower monthly payments, but comes with a higher interest rate.
When applying for a fixed-rate mortgage, your lender will create an amortization schedule outlining how you’ll pay off the loan over time. This is an effective way to budget for ownership costs in your home.
Amortization schedules are an invaluable tool that can help you determine how much interest and principal you owe over the life of your loan, helping to prevent paying too much in interest and not enough in principal. This ensures that you never end up paying too much in either direction.
Online calculators can help you accurately estimate the mortgage costs for any loan term you’re considering. These tools are especially helpful if you want to compare different mortgages.
Fixed-rate mortgages are available for conventional, conforming and federal housing projects. They can be utilized for new construction or to refinance an existing property.
When shopping for a mortgage, your local bank or credit union is the best place to start. They tend to offer competitive rates and have an established track record.
No matter which lender you select, a good mortgage broker can assist in finding the ideal loan to meet your needs and objectives. Professional mortgage brokers possess extensive knowledge about guiding borrowers through every step of the process.
A mortgage broker can assist you in finding a fixed-rate loan tailored to your individual financial situation. These mortgages may be used for purchasing or refinancing a primary residence, investment property, or even a vacation home.
Are you ready to get started with your home purchase? We can match you with a highly rated lender who can assist in finding the ideal loan for you. We will work together from application through close, providing program expertise and superior service at every turn.