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? In each of these cases you will find that different mortgage terms might be the best choice for you.
The two most popular types of fixed rate mortgages are the 30 year fixed rate mortgage and the 15 year fixed rate mortgage. Other types of mortgages (for instance, 10 or 20 year mortgages) are also available, but in the United States, 15 year and 30 year terms are more common.
The main advantage of a fixed rate mortgage is that it allows you, as the borrower, to predict your future monthly payments in an accurate manner. Because the interest rate remains the same, your payments will be consistent and you wont experience large variations in the amount you are required to pay in monthly mortgage payments. You will pay the same amount through the entire life of the loan.
The main disadvantage of a fixed rate mortgage, as opposed to an adjustable rate or other type of mortage, is that your interest rate may be slightly higher over the fixed term. That is because the fixed rate offers you the security of knowing your payment will remain the same. You are not incurring the risk of market fluctuations in interest rates.
Finding the Best Fixed Rate Mortgage
To get the best rate on a fixed rate mortgage, its advisable to shop around and do your homework. Get quotes from several lenders and dont simply depend on one source. If you are a member of a credit union or other member-owned lending institution, be sure to get a quote from them as their rates can often be substantially lower than traditional banks. A skilled mortgage broker may also be helpful in finding you a good rate on a fixed rate mortgage. Ask your friends and associates if they can recommend an honest broker.
