Fixed rate loans are one of the more popular options consumers tend to turn to when financing a mortgage. A fixed rate home loan may be a good choice if you prefer the security of knowing your interest rate will not change, nor will your monthly payment, unless property tax and insurance amounts change, or if you plan to stay in this home for several years.
What is a fixed rate home loan?
This "traditional" type of loan maintains its original interest rate throughout the entire life of the loan. (Any change in monthly loan payments will be due to increases in other charges like insurance or taxes that will naturally occur over time.) Fluctuations in market rates, over the term of your loan, won't have any impact on the amount of interest you pay because that rate is already "fixed."
What types of fixed rate home loans are there?
Fixed rate Mortgage Loans come in various terms such as 15, 20 or 30 years. In determining the length of your loan, you may want to consider:
- Total amount of interest you want to pay over the course of your loan
- For example, the total cost of a 30-year loan in terms of the interest paid on the loan is higher than the total cost of a 10, 15, or 20-year loan. With a 30-year loan, you have the advantage of lower monthly payments due to the longer loan term.
- With a 15-year loan, you have the advantage of repaying the loan more quickly with higher monthly loan payments.
- Your ability to make high monthly payment
- If you can afford to pay more per month, you reduce the number of months you have to pay. Also, choosing a 15-year term will save you thousands in interest charges vs. the typical 30 year term
Another option to decrease the amount of interest you pay is to get a 30-year loan, so you don't lock yourself into higher monthly payments, but pay a little "extra" each month towards the principal when you are able to do so. A great way to send extra towards principal each month is to participate in a budget drafting program. This allows you to make biweekly payments which results in accelerating your term.
Fixed Rate Home Loans
A fixed rate loan is a good choice if you:
- Plan on staying in the home long-term.
- Think interest rates will increase.
- Don't expect your income to increase significantly over the coming years.
- Need to qualify for the largest loan possible.
With fixed rate loans, you may end up paying more in interest charges over the life of the loan. Typically, the benefits of the fixed rate are not realized until later in the loan term. And depending on the term you choose, your monthly payment may be significantly higher than a standard 30-year loan.
We offer three different term options:
|Excellent fixed rate of interest.||Cut mortgage length by a third.||Cuts the length of your mortgage in half.|
|Level principal and interest payments for the full term of the loan.||Save significant amount of money in interest payments.||Save significant amount of money in interest payments.|
|No risk that changing market conditions will increase your monthly payments.|
Or call us at 954-745-2400 or 800-230-0200 and select option 4.