Mortgage 101: A Quick Look At Fixed-Rate Mortgages!
If you are looking for mortgage options, a traditional fixed-rate mortgage may seem like an obvious choice. A fixed-rate mortgage has a constant interest rate and a fixed monthly payment, and the term can range anywhere between ten to thirty years. Expectedly, loans with extended terms have lower monthly payments, but the interest rate is also high. Here are more aspects about fixed rate mortgages.
Why consider fixed-rate mortgages?
One of the biggest advantages of fixed-rate mortgages is predictability. You always know how much you are supposed to pay every month, so that way, your monthly budget doesn’t have to go wary. If you want a mortgage that’s easier to manage, this may work as the best option. Since the interest rate is fixed throughout, it could be an advantage, given that rates have been fluctuating globally for a while now. In case of an economic slump, fixed-rate mortgages may work better.
On the flip side
Refinancing is the only choice to avail the advantages of lowering interest rates. In other words, you will have to think of other options when fixed-rate mortgages have higher interest rate. For some buyers, adjustable rate mortgages work better, especially if they have the intention of selling the house in near future or want to go for refinancing. With fixed-rate mortgages, you may have to pay a tad more in form of interest.
Taking the leap
Every person’s financial needs and situations are different, and it only makes sense to review one’s financial status before taking the call on fixed-rate mortgages. There are many lenders, who may offer advice and assistance for taking an informed decision. It is important to weigh the pros and cons in detail, find the possible aspects that may influence the market and if taking a fixed-rate mortgage is a good idea in the current economic climate.
Things to note
You are required to fill up a form for fixed-rate mortgage, which requires declaration of all details. Your income, debts, and assets will be taken into consideration for reviewing the application. A home appraisal is required for getting the fixed-rate mortgage, because it helps in deciding if the property is worth the price quoted. The lender will assign a loan manager, who will help with all the procedural formalities, and if you have a stable job with required minimum income, it shouldn’t take a long time to get approved for a fixed-rate mortgage.