FIXED RATE MORTGAGES

Many first time home buyers must overcome several obstacles before securing a home loan. For anyone who struggles to qualify for a traditional fixed-rate mortgage, obtaining an FHA fixed rate loan through the U.S. Department of Housing and Urban Development (HUD) might provide the assistance needed.

Why Obtain an FHA Fixed Rate Mortgage?

The Federal Housing Administration (FHA) runs several programs to promote home ownership, including providing potential homeowners with opportunities to secure an FHA loan. An FHA loan is a mortgage insured against default by the Federal Housing Administration. The FHA backs the loan so a lender won’t have to write off the loss if the borrower defaults–the FHA will pay.

Qualifications for an FHA Loan

When shopping around for a home loan, many borrowers are torn when choosing between the two most popular loan options: Fixed rate and adjustable rate mortgages. Both offer unique advantages, as well as potential drawbacks. However, a particular type of adjustable rate mortgage may solve this dilemma and allow borrowers to reap the rewards of both types of mortgages at once. It is known as a hybrid ARM because it offers a combination of fixed and adjustable rate features.

How Hybrid ARMs Work

When it comes to choosing a mortgage loan, many prospective home buyers have to figure out which mortgage option is best for their needs: A fixed rate mortgage or adjustable rate mortgage. Making the wrong decision will often result in the need for an adjustable rate mortgage conversion.

Why Do ARM Conversions Happen?

Photo Credit: James Thompson

A fixed rate second mortgage is a subordinate home loan that is secured against your property with a fixed interest rate. Having a second mortgage means that should you default on your loan, your first mortgage would have priority and would be paid before any funds go toward the second mortgage.

Taking out a second mortgage is different from refinancing a current home loan. Refinancing means you have replaced your primary mortgage with a different primary mortgage. A second mortgage is a separate obligation in addition to your original loan that uses your home as collateral.

When buying a home, you are usually given the choice between two types of financing options: The adjustable rate mortgage and fixed rate mortgage. Though these are both very common types of mortgage loans, the fixed rate mortgage reigns supreme as the most popular choice among borrowers. Here’s why:

What is a Fixed Rate Mortgage?

There are a multitude of reasons why borrowers opt for a fixed rate mortgage, like reliable interest rates and steady payments, but there are a few disadvantages to this option as well. The key to deciding whether this type of home financing is the route for you to take is examine the possible disadvantages of obtaining a fixed rate loan when buying a home.

What Are the Disadvantages of Fixed Rate Mortgages?

When shopping around for a mortgage loan, you will undoubtedly come across two frequently used terms: Fixed rate and ARM.

Fixed rate and adjustable rate mortgages are the two most common types of home loans, but do you know the difference between the two? If not, you may not be sure which one is best. Compare the following pros and cons of each to determine whether a fixed-rate mortgage or adjustable rate mortgage is better for you.

If you are looking to pay off your loan as fast as possible, but with the security of a fixed interest rate, a 10-year fixed rate mortgage might be the best mortgage option for you. These loans have a shorter term than the traditional 15- or 30-year mortgage and tend to have the lowest mortgage rates of all the fixed rate home loan products. Also, since the duration of the mortgage is shorter, you are likely to save thousands of dollars in interest over the life of the loan.

10-Year Fixed Rate Mortgages Versus Long-Term Mortgages

For home buyers new to the world of mortgages, traditional 15- and 30-year fixed rate mortgages are usually talked about most. However, those who are considering buying a home in higher-priced areas should know about the option of even longer-term mortgages: 40-50 year mortgages. These fixed rate mortgages may cut monthly payments by quite a bit, but are they the right choice for you? What are the pros and cons of taking on such a lengthy loan?

To help you decide whether this is an option you want to consider, let’s take a closer look at this type of long-term mortgage.