[Fixed Rate Mortgage]
Fixed-Rate Mortgages have two distinct features. First, the interest rate remains fixed for the life of the loan. Secondly, the principal and interest payments stay the same over the life of the loan and are structured to fully repay the loan at the end of the term. Fixed-rate mortgages give you the security of monthly payments that don't change. You'll pay the same amount of principal and interest each month because the interest rate never changes during the life of the loan. Various fixed-rate terms are available. If you plan to stay in your home for a long time, interest rates may be your main consideration. For that reason, a fixed-rate mortgage may be a good option for you.
ADVANTAGES OF FIXED RATE MORTGAGES
- No risk that your principal and interest payments will go up because the interest rate never changes.
- It's easier to budget because you always know what that payment is going to be.
- Can tie up an attractive interest rate for a long term.
DISADVANTAGES OF FIXED RATE MORTGAGES
- You may pay a higher interest rate for the security of a fixed rate.
- Stricter qualifying guidelines than for an ARM because initial monthly payments may be higher.
