Top 3 Benefits Of Fixed Rate Loans

A fixed rate loan is a mortgage loan first developed by the Federal Housing Administration. Fixed rate loans have become one of the most popular loans in America due to it’s unique benefits. To help you decide if a fixed rate loan is right for your mortgage, here are the top three benefits of fixed rate loans.

1. Lock: Unlike variable rate mortgages, a fixed rate loan ‘locks’. This means that the interest rate on the note will remain the same through the loan. This is one of the major differences that attract many homeowner’s to use fixed rate loans. Since the loan is locked the interest can’t change, this let’s the customer feel a little more at ease knowing that they won’t have to suddenly pay more each month.

2. Loan Term: Whatever your desired amount of time maybe for you term, a fixed rate loan allows you to choose what is desirable for you. While the most common terms are 15 or 30-year mortgages, shorter terms are also available and for those who want longer terms 40 and 50-year mortgages are also available and are common in areas with high priced housing.

3. Prepayment: In the U.S., a fixed rate mortgage offers the ability the prepay capital early without a penalty. When you pay early, part of the principal reduces the total interest paid. This will allow you to shorten the amount of time needed to pay off the loan!

While a fixed rate loan may not entice everyone, it can be a great help to many. If you want a mortgage loan that allows you to have a fixed interest rate and allows you to choose the term you feel you need then a fixed rate mortgage may be what you need.