Fixed-Rate Mortgage
If the house you’re buying is one you plan to call home for a long time, a fixed-rate mortgage may be the ideal loan for you.
What is a fixed-rate mortgage?
Fixed-rate mortgages provide you with a mortgage interest rate that stays the same. From the moment you close on your mortgage to the day you pay off your loan, your monthly principal and interest payment stays consistent and manageable, alleviating any surprises. Fixed-rate mortgages are ideal if you want to settle in with a rate that’s settled!
Types of fixed-rate mortgages
There are several types of fixed-rate mortgages for purchase and refinance. Some more popular ones are:
They’re available in a variety of term lengths, generally ranging from 10 to 30 years.
Fixed-rate mortgages feature a stable, unchanging interest rate that doesn’t rise or drop with market rates. If market rates should fall below your fixed interest rate, you can apply to refinance your mortgage to save on your monthly payments.
Eligibility
Eligibility standards will vary depending on the type of fixed-rate mortgage that’s right for you, but you must have sufficient income and credit history to qualify.
Fixed-Rate Mortgage pros and cons
To help you decide if a fixed-rate mortgage is right for you, here are some benefits and drawbacks.
Pros
- Interest rates are set and won’t change
- Your monthly principal and interest payment won’t change
- You’ll be protected from rate increases
- You may be able to refinance if market rates decrease
Cons
- Your initial interest rate may be higher than an adjustable-rate mortgage
- Your mortgage payments may be higher than initial ARM payments
- Your interest rate won’t automatically lower if market rates drop below your fixed interest rate
