What is a Fixed Rate Mortgage
A Fixed-rate mortgage is the most common mortgage for many homebuyers because the monthly payments are stable. The interest rate you lock-in will be the same interest rate you pay for the life of the loan.
Benefits of a Fixed-Rate mortgage:
- Inflation protection - If interest rates rise, your mortgage and your mortgage payment are fixed and won't be significantly affected. Even if your taxes or insurance costs go up over time, your basic loan payment (principal and interest) will stay the same. This is especially helpful if you plan to own your home for five or more years.
- Long-term planning - You know what your monthly housing expense will be for the entire life of your mortgage. This can help you plan for other expenses and set long-term financial goals for you and your family.
- Low risk - You always know what your payment will be, regardless of what current interest rates are. This is why fixed-rate mortgages are so popular with first-time buyers.
- Your mortgage interest rate won't go down, even if interest rates drop, unless you refinance your mortgage.
- Because the interest rate is usually higher than other types of mortgage loans, you may not qualify for as large of a fixed rate mortgage than you might with an adjustable.
- Your total monthly payment can occasionally increase based on changes to your taxes and insurance. In many cases you pay these costs through an escrow account that we establish for you.