What Is A Fixed-Rate Mortgage?

Posted on: 24 April 2020

If you're thinking of purchasing a home, you're likely planning to use a mortgage to pay for it. There are a variety of mortgage product options out there. Just like with rental payments, when you have a mortgage, you'll pay monthly payments toward the cost of your home. Some homeowners choose to take out a fixed-rate mortgage. Keep reading to learn more about this type of mortgage:

What is a Fixed-Rate Mortgage?

A fixed-rate mortgage has an interest rate that stays the same for the life of the mortgage loan. While your home insurance and property tax totals may change over time, the principal and interest on your mortgage won't change. This is a nice option for homeowners who don't want to deal with fluctuating interest rates.

How Does This Differ From an Adjustable-Rate Mortgage Rate?

While a fixed-rate mortgage offers an interest rate that stays the same, an adjustable-rate mortgage rate can change over time. That means the rate can go up or down. 

How Long Will I Pay A Fixed-Rate Mortgage?

There are a couple of options available for this type of loan. Many homeowners choose to take out a 30-year fixed-rate mortgage, so they will make payments for 30 years. Another option is to take out a 15 year fixed-rate mortgage. This means that payments will be made for 15 years and you'll pay a higher principal amount each month to pay off the loan a lot faster. You'll end up paying less lifetime interest when you take out a 15-year loan. To choose the right option for you. consider your goals and financial situation.

Is a Fixed-Rate Mortgage Right for Me?

As you begin to consider your mortgage options, you may be wondering what kind of mortgage is right for you. You'll want to take a look at your credit history and have an idea of the credit score that you have now. This can help you decide if it makes more sense to try to get a great fixed-rate mortgage or if you should aim for an adjustable-rate mortgage. As always, a mortgage lender can help you make a more informed choice based on your financial situation and credit history.

A fixed-rate mortgage can be a great option as it makes your mortgage payment more predictable. If you're ready to explore mortgage options and want to get pre-approval, reach out to a local mortgage lender like Sharefax Credit Union to get started.