The Best Fixed Rate 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

The two most popular types of fixed rate mortgages are:

• The 30-year fixed rate mortgage
• The 15-year fixed rate mortgage

Other types of mortgages (for instance, short-term mortgages of 10 years) are also available, but in the United States, 15 year and 30 year terms are more common.

Advantages of Fixed Rate Mortgages

The main advantage of a fixed rate mortgage is that it allows you, the borrower, to predict your future monthly payments accurately. The interest rate remains the same for the entire term of your loan, so your payments will be consistent and you won’t experience large variations in the amount you are required to pay each month–you will pay basically the same amount through the entire life of the loan.

Disadvantages of Fixed Rate Mortgages

The main disadvantage of a fixed rate mortgage, as opposed to an adjustable rate or other type of mortgage, 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, it’s advisable to shop around and do your homework. Get quotes from several lenders–don’t simply depend on one offer. 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.