A fixed rate loan offers predictable, easy to amortize payments and protection against rising interest rates. As the name implies, the interest rate on a fixed rate mortgage is fixed for the term of the loan.
The decision to go with a fixed rate mortgage or one with a variable interest will depend upon your personal situation. Fixed rate loans offer the certainty of always knowing what your loan payments will be.
Fixed Rate Loans are especially attractive to…
- Borrowers who like the certainty of a fixed payment for the life of their mortgage.
- Borrowers who are concerned about the impact that rising mortgage rates could have on their mortgage payments.
- Borrowers who lack the financial flexibility to withstand an increase in their monthly mortgage payment.
Fixed interest rate
The interest rate will remain the same from the time of origination to the end of the mortgage loan term.
Protection from rising interest rates
Nobody knows the direction of current mortgage rates; a fixed rate loan protects you from rising rates.
Predictable, easy to amortize payments
Fixed payments bring a level of certainty to your expenses for housing.
Easy to compare different lenders
Fixed rate loans are relatively easy to compare among different lenders when shopping for a mortgage.
Not subject to rising interest rates or changes in the economy
Your interest rate and the other terms of your mortgage are fixed, regardless of the direction of home mortgage rates or what is happening to the economy.
Easy to understand
A fixed rate loan is easy to understand. You don't have to understand the adjustment triggers or any similar features. The payment and the term are fixed, period.
Fixed Rate Loan
Get an idea of what your monthly mortgage payment may be, including costs associated with your mortgage such as property taxes, homeowners insurance, and Private Mortgage Insurance (PMI), if applicable.
Recalculate your new house payment based on loan amounts, interest rates, and other factors, to see if refinancing your mortgage is a smart financial move.
Calculate how much house you can afford. Get an estimate for a mortgage amount that may fit comfortably within your budget.
Frequently Asked Questions
No. Mortgage rates and loan terms can vary among lenders, it pays to compare loans offered by various lenders. The amount of the down payment and other factors can vary among lenders. Its wise to compare loans offered by several lenders and to be sure you understand all aspects of the loan terms.
Typically, a fixed rate loan will have the same terms for all borrowers, as these loans are often sold by lenders. If customization is what you are looking for, an adjustable rate mortgage might be a better option for you.
You can refinance your fixed rate mortgage; however, you will need to apply for a new mortgage, and our underwriting standards will apply at the time of your new application. This might make sense if interest rates have decreased since you took out your current loan.
A fixed rate loan offers predictability and stability. Your payment and the term of your loan are fixed, allowing you to plan and budget around this payment. This can be a great option for someone who is planning to stay in their home for a long period of time.
The rate and payment on a fixed rate loan are fixed for the entirety of the term of the loan. The lender cannot increase your home loan interest rate or your payment regardless of the direction of interest rates or the economy.
Your payment will likely be higher for a fixed rate loan than the payment for the initial fixed term of an adjustable loan. The trade-off is stability and predictability in your payment over the life of the loan. The overall cost of a fixed rate loan may be less over time than an adjustable rate loan.
Over the life of the loan, you could pay more interest on a longer loan term versus a shorter loan depending on the rate. The trade-off is a lower monthly payment on a longer loan. A shorter loan period may allow you to pay off your home sooner and save money on the interest paid over the life of the loan.
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Why Finance of America Mortgage?
We’re not about pushing loan papers. We’re about moving your dream forward. And we do that through knowledgeable local advisors, a personal approach, and a variety of smart loan options.