Sunday, December 03, 2006

Fixed Interest Rate Mortgages - Getting The Best Fixed Rate Loan

If you are purchasing your home and plan on staying rooted for a very long period of time, say forever, and you are financially stable and standing on firm solid ground with a flexible budget, then you might want to explore the option of a fixed-rate loan. A fixed rate loan is best for folks who plan on staying in their home at least 15 or 30 years and has many advantages over other loan options.

A fixed-rate loan is just as it sounds, the interest rate that you accept is fixed, meaning it will not fluctuate with the whims and fancies of the open market. Forevermore, your rate is set in stone and your payments are laid out in an easy to understand fashion that leaves no room for surprises. The most common fixed-rate loans are the 15 and the 30-year loan. The 30 year loan is the choice for most, offering lower monthly payments than the 15-year, but the 15-year loan can offer lower rates and interest, as well as quicker home equity. Although the 15-year loan is an option, it comes with higher payments for paying your loan off twice as fast as with a 30-year. In the end, it depends on your budget for payments and how long you think you will stay before desiring a move.

Advantages of a Fixed Rate Mortgage
The advantages of deciding on a fixed-rate loan over other options are fixed monthly payments over the entire life of the loan and non-changing interest rates, which offers protection from rate increases and the ability to choose to refinance if the rates decrease. All in all, the advantages are quite straightforward and allow room for cheaper rates without the risk of climbing interest rates. If you are buying when rates are low, this is definitely the best option for locking in your rate.

Disadvantages of a Fixed Rate Mortgage
The disadvantages of a fixed-rate loan are minimal, but include the possibility of locking in a high interest rate, accepting non-changing high monthly payments, and the commitment to a certain interest rate, even if the interest rates on the market improve and decline.


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