Best Fixed Rate Mortgage

Fixed rate mortgages – the name says it all. You get a fixed rate that stays the same for the life of the loan, usually 15 or 30 years. Although your interest rate will be a little higher than with an ARM, you will know exactly how much you’ll pay per month for a few decades. If you love stability, this loan is probably for you. Also when interest rates are low, this is the loan that lets you cash in for years to come.

ARMs, on the other hand, are anything but stable. These loans generally have a lower initial interest rate than fixed rate loans (usually around 2% less). This initial teaser rate usually lasts anywhere from 1 to 10 years. You’ll know it’s an ARM when you see 3/1, 5/1, 10/1; respectively, these are 3, 5, and 10 year fixed rates. After the set time, the rate varies based on a standard, usually the Treasury Bond rate. The rate can change monthly or yearly, but yearly changes usually work out best for the consumer.

Lenders are also tightening their lending criteria and so if you do not have a good credit rating you might be offered even higher interest rates because you are perceived as a higher risk to lenders. A fixed rate mortgage or home equity loan has financial benefits you might want to consider before you make your final decision. A fixed rate home loan would safeguard you from higher mortgage payments in the future. If you plan to own your home for awhile, then this could be to your advantage.

Getting the lowest fixed rate mortgage or home equity loan quote can be done online from your computer. When securing a fixed rate mortgage a homeowner can opt for a 30 year or a 15 year mortgage term. A homeowners that is able to make the payments on a 15 year fixed rate mortgage will save a considerable amount on the interest over the life of the mortgage loan.

You may think you need to shop around for the cheapest rate in order to secure the best fixed rate mortgage, but that is not necessarily true. Most of the time fixed rate mortgages will be identical from one lender to the next one. Once you have done some research and determined that the rates are indeed identical, you should look at the lenders reputation.