First, What Is A Fixed Mortgage Rate

Category: Finance.

There are several benefits on getting a Fixed Mortgage Rate versus the quick and easy Adjustable Rate Mortgage( ARM) . First, what is a Fixed Mortgage Rate?

Probably the most attractive part is the simple comfortable feeling that most homeowners get by knowing their monthly mortgage payments are not going to go up, and put a strain on their finances. It is simply a mortgage that stays the same, and interest rate, monthly payments for the length of the loan. The only way to change your fixed rate mortgage is by doing a refinance on the home loan. Your monthly payments will never change, and therefore cannot increase. The smart move is to do a refinance when rates are at historical lows and the overall industry is seeing a hurt. Once you start hearing the Fed is start to cut rate, it is a perfect time to get another Fixed Rate, don t fall into the trap that many home owners do, by refinancing with an adjustable rate, if you are not going to be financially able to deal with the monthly unexpected increases in your payment. That s usually around the time the Fed cuts it s rates, and mortgage companies start advertising heavily.

Hunting for the perfect time to wait till the Fed cuts rate is another story I will write upon. Let s review: A. Now you see there are several advantages of a fixed mortgage loan. A Home Owner will know what their monthly mortgage payments will be each month. You will be able to set a budget accordingly and be able to stick to it, and get better financial stability with it. The majority of borrowers are more comfortable with this interest rate and having the simplicity of making one predictable payment for the length of the loan.

On an ARM loan or similar loan program, an interest rate adjustment could mean you are paying a couple or more of hundreds of dollars each month, depending on the program your choice. Everyone loves it when their payments are low. there are downfalls. Two, when payments go up, which they usually do, they are mostly going towards the interest rate, and not the principle. One, you are not building equity into your home when payments are low. The usually ARM program is low payments for the first 5 years, the current interest, and then bam rate is now included and your low payments may triple or mostly quadruple once your 5 years is up. On a fixed rate mortgage you will not get a 5 year surprise.

There are several only resources that can help you find a perfect low fixed rate, and make sure you do your research. Currently the industry is near the historic lowest, and it is time for home owners with ARMs, and even fixed rates to start shopping for a new lower fixed mortgage rate. Make sure the company you are dealing are with the Better Business Bureau, and are reputable. Overall mortgage applications for ARMs have declined it has reached it lowest point since March 200