Fixed Rate Mortgage Guide

  • Michelle ConstanceAuthor
  • 10.01.2014Date
  • Mortgage TypesCategory

A mortgage that has a fixed interest rate for the entire term of the loan is a fixed-rate mortgage. The difference between a fixed-rate mortgage and a variable or adjustable-rateĀ mortgage is that the borrower knows what the interest rate will be for every month of the mortgage term at the time the mortgage loan originated. With a variable rate mortgage the rates fluctuate depending on the market. The benefit to a fixed-rate mortgage is never having to worry about the varying loan payment amounts, and fluctuations in the market.

With an adjustable rate mortgage you may benefit in the beginning from low rates; however, studying the yield curve will show that traditionally rates increase over time. For homeowners who would like to secure lower interest rates in the beginning of their loan, and areĀ willing to risk higher payments later on, an adjustable rate mortgage is a better option. For those borrowers who prefer security and confidence in their ability to make payments, a fixed-rate mortgage is a safer option.

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