If you are new to the home buying game, you’re probably astonished at the amount of lingo you’ve been hearing and reading about. You can have a fixed-rate or adjustable-rate mortgage. It can have a term of 15 or 30 years, or even a custom term. And so much more!
Turns out, you have to decide which type of mortgage is right for you. But before you can decide whether a fixed-rate mortgage makes sense for you, you need to know the basics about what these types of mortgages are and how they work.
What Is A Fixed-Rate Mortgage?
A fixed-rate mortgage is a home loan option with a specific interest rate for the entire term of the loan. Essentially, the interest rate on the mortgage will not change over the lifetime of the loan and the borrower’s interest and principal payments will remain the same each month.
With this type of mortgage, even fluctuations in the market will not have an impact on the rate. Because of this, these types of home loans are the most popular mortgages in the U.S.
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How A Fixed-Rate Mortgage Works
When it comes to fixed-rate mortgages, the name says it all. When you get one of these mortgages, your interest rate will remain the same for the entire time you’re paying off the loan. In other words, the interest rate is fixed.
Is A Fixed-Rate Mortgage Right For You?
Fixed-rate home loans are the backbone of the mortgage industry for a lot of good reasons. The main benefit of a fixed-rate mortgage is that your monthly mortgage payment will remain the same throughout the life of the loan. With a fixed-rate mortgage, the amount you pay toward the mortgage itself, the part that’s made up of your principal and interest, won’t change.
As we’ve seen, fixed-rate mortgages are great for stability. If you don’t want to have to worry about your monthly payments changing down the road, a fixed-rate loan can make a lot of sense. They can also be a good choice if interest rates are low, as they are currently.
The Bottom Line: A Fixed-Rate Mortgage Offers Certainty In A Constantly Changing World
Ultimately, the type of mortgage you choose will depend on your own financial situation, and what you’re comfortable with. If you’re ready to get started with the mortgage process, you can APPLY NOW with Forest Hills Mortgage