FIXED RATE MORTGAGES

As a homeowner of a fixed rate mortgage, you may be wondering what happens if you default on your payments. Of course, this is an occurrence that you should never let happen. However, because extenuating circumstances can and do occur, it’s good to know just what you can expect if you do fall behind.

Why People Default on Their Mortgages

What is the best fixed rate mortgage for you? The answer to that question will be determined by your own special circumstances and needs. Are you refinancing your home to a better rate? Are you a first time home-buyer? Are you taking out a second mortgage to fund a special project, such as a home improvement? You will probably find that different mortgage terms are best in each of these cases.

Most Common Fixed Rate Mortgages

In your search for the best fixed rate mortgage, you are probably going to come across 15- and 30-year fixed rate mortgages the most often. A 30-year fixed rate mortgage is a loan in which the interest is set at the same rate for the full 30-year term.

The 30-year fixed rate mortgage accounts for a very large percentage of all home loan mortgages, likely because of it’s reliability. Compared to an adjustable rate mortgage (ARM), the fixed rate mortgage is easy to understand and offers a consistent monthly payment which makes it simpler to budget into monthly expenses.

Why Choose a 30-Year Fixed Rate Mortgage?

You might secure a fixed rate mortgage because of the reliability and security of an interest rate that remains the same during the entire life of the loan. Some other types of loans, such as an adjustable rate mortgages, may include a fixed-rate for a short period of time, but usually only as an introductory or teaser rate. That’s probably why fixed rate mortgages are the most popular type of home loans in the United States. However, if you do choose a fixed rate mortgage, your decision doesn’t end here–you must decide how long you want the loan to last.

Why Choose a 15-Year Fixed Rate Mortgage?

A fixed rate mortgage (FRM) is quite possibly the most popular type of mortgage. As its name implies, it’s a home loan with an interest rate that remains fixed for the entire term. Whereas the interest rate on other types of loans, such as an adjustable rate mortgage, may adjust or “float” even if there is an introductory fixed rate period, the interest on a fixed rate mortgage remains the same no matter what for the entire loan term.

Mortgages have been making the news regularly these days and it’s always either because people can’t afford the one they have or because lenders are offering mortgage loans at ridiculously low interest rates.

In fact, the national average mortgage rate for a 30-year fixed home loan is hovering around 4.25 percent right now. Let’s start the month of October off on a positive note and examine which banks and credit unions are offering the lowest mortgage loan rates near you:

Ryan Guina is an entrepreneur and writer. He has worked for Fortune 500 companies and served six years in the USAF. He writes about money management and small business topics at Cash Money Life and military money topics at The Military Wallet. You can follow his twitter feed.

My wife and I are prepping our house for the market. We have a two-bedroom home and a little girl and space is getting tight! Even though we aren’t quite ready to buy a new home, we’ve already started looking at our options for finding the right mortgage.

After several month of continued escalation, mortgage rates have declined. Those who were kicking themselves for missing an opportunity of getting the lowest mortgage rates in decades, once again stand a chance as the current reported rate for a 30-year fixed mortgage has decreased to 5.12% (down from 5.29%).

Mortgage giant, Freddie Mac released the information in a statement earlier today. Although on the surface the number may seem insignificant according to Freddie Mac, if a homeowner refinanced their  1-year old $400,000 mortgage today, the savings would result in about $344 a month. That comparison was made to the average mortgage rate of this time last year which was 6.47%.

Recent rate increases in the housing market may be having an effect on those who want to refinance. As the market stabilizes, it seems to become more difficult for individuals to negotiate themselves into favorable mortgages.

Why Are Rates Rising?

Months of lost jobs and foreclosures resulted in tons of individuals having to walk away from their homes. In fact, pre-owned home sales saw the lowest numbers in 12 years just in January of 2009. As a result, the market was flooded with homes that needed to be sold – at any cost. This was good news for those who were looking for some cheap deals, especially since home prices dropped 14.8% in a year’s time. These low prices encouraged many to get back out to buy a house at a great price.

Are you thinking about buying a home? Now is certainly a good time to do it, what with home values in free-fall all over the country. Foreclosures abound, in both high-end neighborhoods and otherwise, and there are definitely a lot of deals out there. If there were ever a true buyer’s market, this is it. When you do decide to buy a new home, you’re going to need a mortgage (that is to say, unless you have a cool couple of hundred thousand dollars lying around), and there is a very good chance that the bank (or credit union, or other lending institution) is going to charge you an interest rate that is influenced by the prime. The prime rate is one of the most important and best-known indexes used by financial institutions to set interest rates.

The prime rate, also known as the prime lending rate, is based on the federal funds rate. The federal funds rate is the rate that banks charge each other for borrowing money. Why do banks borrow money from each other? Because they are required to keep a balance with the Federal Reserve, and if they are short they borrow from each other. The interest they charge on each other’s loans is set by the Federal Reserve Board. So, this is what the prime rate is based on. The best-known prime rate index is the Wall Street Journal Prime Rate, published in that famous paper. When the prime rate goes up or do, so could your interest, if you have an adjustable rate mortgage. If you have a fixed-rate mortgage, the rates you can choose from at the time of your loan will be influenced by the prime rate.