What Is A Fixed Rate Mortgage?
As its name implies, a fixed rate mortgage is one where the interest rate on your home loan remains the same throughout its duration. This differs from a loan where the interest rate may change over time, such as an adjustable rate mortgage. Fixed rate mortgages are the most popular form of home mortgage in the United States largely due to the appeal of a consistent mortgage payment amount over the life of the mortgage.
In many instances, fixed rate mortgages have higher mortgage payments than adjustable rate mortgages. This is most often because the interest rate remains unchanged for the duration of the loan. Typically, mortgages with longer terms will have a higher interest rate than mortgages with shorter terms due to interest rate risk, or the possibility of fluctuating interest rates. This is an update.
Fixed Rate Mortgage Benefits
The biggest benefit of a fixed rate mortgage is the fact that the interest rate does not change over time. This allows you to budget your finances and make a consistent, fixed payment over the duration of your mortgage.
Fixed rate mortgages allow you to lock in an interest rate and principal payment for the entire life of your loan. Your rate and principal payment never increase, even if the market changes – giving you peace of mind.
Other benefits include:
- Competitive interest rates
- Locked interest rate for the life of your mortgage
- Easier-to-understand loan terms and paperwork
Get Pre-Qualified For A Fixed Rate Mortgage
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