More Thoughts on Fixed Mortgages
A fixed mortgage is designed to give you the same interest rate that you signed up with for a set period of time. Mostly they are either fifteen- or thirty-year mortgages. The great advantage of a thirty-year mortgage as opposed to a fifteen-year mortgage is that you’ll have more money left over at the end of each month. But the more years you have the mortgage, the more years you’ll spend repaying the money with interest. With a longer mortgage term, you’ll be paying much more interest over the life of the loan.
Some fixed-rate mortgages only offer a fixed rate for just one year. This kind of offer may be made to bring in someone who never before would have qualified for a mortgage loan. 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. Unfortunately this is not always a good thing! Naturally, one disadvantage of carrying a fixed mortgage is that you will decrease your odds of getting a lower interest rate in the event the housing market enters a slump. Those with an adjustable rate mortgage will pay eitherhigher and lower rates depending upon the housing market.
The best part of a fixed mortgage is that your monthly installment is decided in advance. If you’re trying to stick to a budget, a fixed rate mortgage guarantees against your payments each month increasing precipitously. There are folks who’ve foolishly been talked into taking an adjustable rate mortgage, even though they know their budget can’t accommodate a rise in interest rate. However, if you take out a “fixed” mortgage loan, you are informed in advance as to what the precise amount of your monthly payments will be.
For more information about fixed mortgages, be sure to visit the link.