Fixed Rate Mortgages

Written by Norene Anderson
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Fixed rate mortgages remain lower than they have been for many years making this a good time to buy a home. The option of a fixed rate mortgage or an ARM (adjustable rate mortgage) sometimes confuses the homebuyer. Initially, the ARM may be more appealing, especially if the interest is very low. The question all eventually must answer is if it is worth the chance that the interest rate will not go excessively high before the end of the mortgage.

With fixed rate mortgages, the interest rate you start with is the one you end with. This makes it great when interest rates are as low as they are today. No one knows where the interest might be in 15 or 30 years. An ARM may be the way to go for some situations, but if you intend to live in your home indefinitely, a low fixed rate is the wise choice.

Benefits of Fixed Rate Mortgages

Buying a home on a fixed rate mortgage offers the possibility of getting into a home with a lower down payment than with other types of loans. Other variations that may be offered include fixed rate mortgages with a balloon note. This means that the first segment (usually 7 years on a 30-year note) is financed at a fixed rate. At that time, the total balance is due and the option to refinance at the current interest rate is available.

Many other variations are available for mortgages with fixed rates. It is easy to do online comparisons of the different mortgage companies and lending institutions to find one that offers what you need. If you do your homework and research before contacting a broker, you will be informed and understand the process of obtaining a fixed rate mortgage.

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