MORTGAGE Blog & ARTICLES
Advantages of Fixed Rate Mortgage
If you are building your own house, you will need to purchase a new property. In gathering funds for the project considering mortgage can be the best option. The most popular type is the fixed rate mortgage. It offers fixed interest rate and financial security from 1 to 30 years. Fixed Rate Mortgage is designed to provide a constant interest rate for the entire period of time.
There are 15 and 30 year mortgages. The 30 year mortgage provides you more left over money every month as compared to 15-year mortgage. The longer the mortgage, the longer you will be paying it back. But then, the longer you pay your mortgage, the more interest you are going to pay overall.
Some fixed rate mortgages only offers up to 12 months fixed rate. These are commonly offered to attract new customers who are hardly qualified for a mortgage. The initial interest rate usually is higher than a variable rate mortgage, but at least it is fixed. The fixed rate mortgage’s main advantage is that you can sustain exactly how much you will be paying each month. It will be good if you have a fixed monthly income. From the word itself “fixed rate” it will be the rate you will pay for the entire duration.
Many people have been tricked taking on a variable rate mortgage and cannot afford any substantial change in the payments. Another advantage of the fixed rate mortgage is that when your income increases, you won’t be required to pay anything extra. You have a fixed rate mortgage but you can have your extra money spent for your personal things. Nevertheless, if you will be planning to pay your mortgage before the maturity, you will mostly find that there will be high fees included.
This type of mortgage loan can be used by first time buyers, and of course the existing mortgage holders searching for lender that can refinance their mortgage. The underlying bank rate increase won’t affect your property’s mortgage bill. By that, it could probably save you a bunch of money. You will have an opportunity to negotiate and settle a deal with a lower interest rate than that of the average variable rate.
Because of the minimum risk the fixed rate mortgage is involved, it became the most preferred loan for most borrowers. If you will be making a decision to opt for the fixed rate mortgage, it will surely and financially advantageous. It is much better than the variable rate mortgage in which there are uncertainty that usually comes during the end of the month as your mortgage payment is due. Fixed mortgage gives you peace of mind even when you enter an inflationary period.
Overall, fixed rate mortgages are without a doubt the common option for more than 70% of the homeowners. There is a definite level of security in which a fixed mortgage included, so switching to fixed mortgage rate is proven to be a wise financial decision for everybody.
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