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Fixed Rate Mortgage

When you are planning to purchase a new home or do a mortgage refinance, there are many different mortgage products available.  Fixed rate mortgages seem to be the most popular types of loans.  If you are thinking of the idea of making a home purchase, or refinancing, you may want to know more about the fixed type of mortgage and mortgage refinancing options.  

As is implied with the name of this type of mortgage loan, fixed rate mortgages have a fixed interest rate for the duration of the term of the loan.  The mortgage holder charges you interest in order to make a profit and to cover the cost of processing your loan and lending you money.  Adjustable rate mortgages have their interest rates tied to the moving markets on Wall Street, and that is why the rates adjust so frequently.  Alternately, a fixed rate is connected to the prime rate at the time the loan is written and closed.  With a fixed rate loan, once you lock it in, the rate stays at that level.  For instance, the interest rate may be fluctuating between 4.5 and 5%, and you are able to lock it in at 4.75%.  That is the rate you will be charged on the money you have borrowed for the entire 30 years you have the loan. 

30 years is the most common term for fixed rate mortgages.  15 and 20 year terms are also readily available and are a great idea if you can afford the higher payment.   The main benefit to the fixed rate loan is that you can count on your payment remaining the same month after month.  You don’t have to stress or worry about changes in the interest rates affecting your house payment amount.  FHA, VA, and conventional loans all have fixed rate products, so there are quite a few choices when deciding on loan of this type.  If you are currently in a bad credit mortgage with a higher interest rate, mortgage refinancing to a new fixed rate mortgage with a lower interest rate is an excellent way to adjust the term back to 30 years and lower your monthly house payment.   

With interest rates staying low, now is a great time for you to do a mortgage refinance or to purchase a home.  The fixed rates mortgages have been around for many years and have a proven track record of success over time.  If you call your lender or bank they can go over the details with you and help you decide if now is a good time for you to go through the application process for one of these loans for your new home or mortgage refinance.