If you plan on purchasing a home in the future, the terms “fixed-rate” and “adjustable-rate” will become familiar to you. Which is the better option? If you want rate and payment security, which way should you head? We understand the intricacies of available loan options can be daunting, so let us help clear up the confusion.
In this post, we’ll focus on a fixed-rate mortgage and whether it’s the right choice for you.
What is a fixed-rate mortgage?
A fixed-rate mortgage is a mortgage option that has a fixed interest rate for the entire term of the loan. For many homebuyers, a fixed-rate mortgage is preferred given that the interest rate over the length of the mortgage is known at the time the mortgage is originated.
The homebuyer will not have to worry about varying loan payments fluctuating with interest rate changes.
What are the advantages of fixed-rate mortgages?
Your unique financial situation will ultimately determine whether it’s the right solution for your needs, but a fixed-rate mortgage offers many advantages:
- The ability to lock into a low-interest rate.
- Consistent monthly payments.
- Stability makes budgeting for your future easier.
If your income will remain relatively stable, or you prefer the comfort of knowing what you may owe each month, the stability and peace of mind that comes with a fixed-rate mortgage may make planning for your future easier. Though the homeowner’s insurance premium or property taxes may change, the payment on your fixed-rate loan may remain very stable.
The stability and peace of mind that comes with a fixed-rate mortgage may make planning for your future easier.
It is ultimately up to you to decide if a fixed-rate mortgage is the right home financing solution. If you prefer the peace-of-mind that comes with consistent monthly payments, or feel that you should lock in the rate on your loan based on today’s interest rates, a fixed-rate mortgage might be the perfect option.
To speak with one of our mortgage experts, or if you have additional questions about a fixed-rate mortgage, please get in touch with us today!