Understanding Fixed Rate Mortgages/ Fixed Rate Loans
When shopping for a mortgage or loan, you have two options: the fixed-rate and adjustable-rate mortgages. These are classified according to how a lender charges interest on the loan. This article focuses on fixed-interest mortgages.
What defines Fixed-Rate Mortgages?
Fixed-interest mortgages have an interest rate that stays the same throughout the term of the loan, regardless of changes in the market.
Let’s say you get a 4.5 percent interest rate from a lender for a 30-year fixed-rate mortgage. This means you will pay 4.5 percent on the loan regardless of whether the market rates go up or down.
Why should you consider Fixed Rate Mortgages?
Makes Budgeting Easier
When you know how much you will pay every month, you can plan your budget well. This helps you manage your finances the right way.
Traditionally, you could only get 15 and 30-year fixed rate mortgages. At the moment, lenders have expanded the product mix to include 10, 20 and 40-year terms. This means you have an opportunity to choose what suits you according to your needs and repayment prowess.
Long-term or Short-term?
10 and 15-year mortgages represent short-term plans. The short period gives you a lower interest rate for a short time, which helps you build equity faster. This is vital if you wish to build enough equity for refinancing the current mortgage.
On the other hand, extended periods such as 20 and 30-year terms allow you to spread the payments over a long period of time. This allows you to avoid the risk of defaulting on the loan, as well as saving money.
How can we help?
At Centex Capital, we have lenders who are ready to finance your needs with a variety of mortgage products. We help you identify the right product and apply for it.
Contact us for more information. Email us or call us at (800)842-2910.