About Fixed Rate Mortgages
There are many popular mortgage loans available, each one with its distinct features and offerings. However, one of the most popular is the fixed rate mortgage, as can be attested by the statistic that roughly 75% of all home mortgages are fixed rate mortgages.
So what makes fixed rate mortgage so popular? As the name suggests, this mortgage has a fixed interest rate. What this means is that whatever happens to the market rate, whether it rises or falls, once a borrower and lender have come to an agreement on the interest rate, it is fixed for the duration of the life of the loan.
This gives borrowers an easier time budgeting their monthly principal and interest payments, and on a more psychological level, can give peace of mind to the borrower, who doesn’t need to worry what happens to the market.
Fixed rate mortgage loans are flexible as well. While it is common to offer 30 year terms, 10, 15, 20, and 40 year terms are also available. The advantages and disadvantages of each term lay solely on the interest rates and the monthly payments.
A good tip in deciding which term to choose is that, the shorter the duration, the smaller the interest rate, but the higher the monthly payment. As terms become longer, the interest rate becomes higher, but the monthly payments become smaller.
Choosing the best fixed rate mortgage terms for you depends on your preference and lifestyle. If you want to be aggressive in paying off the loan, and want to end up paying a smaller amount in the process, then a shorter term might be best suited for you. But if you cannot afford high monthly payments, and might be willing to pay a larger amount in the long run, then a longer payment term is better.
Remember, however, that while fixed rate mortgages might sound very good, there are always other options available. Before you decide, be sure to study all of them by speaking with a lender, or by visiting various websites in your area, such as MySanDiegoMortgage.com, which discusses popular San Diego mortgage loans including second mortgages, equity mortgage, short-term financing and more.
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