Fixed Rate Mortgage Loans

When you take out a loan, you will need to pay interest on that loan. There are two types of interest rates for loans, fixed and variable. Here, we will be talking about fixed rate mortgage loans.

On a fixed rate loan, the interest rate on the loan remains the same as time goes on. While the interest and principal paid may change as time goes on, the amount paid each month does not. This is useful for mortgages, as it will allow you, the borrower, to plan your finances in advance. It also means the borrower is protected against sudden interest rate increases.

A popular fixed rate mortgage is the 30-year mortgage. The predictability of this mortgage and the low monthly payments makes it an appealing option to home buyers. However, this also means that the lower monthly payments will mean that the mortgage will take longer to pay off. The shorter the mortgage term, the higher the monthly payments will be. At the same time, the mortgage is paid off that much sooner. The interest rate on shorter term mortgage will be lower as well.

Regardless of what length of term the fixed rate mortgage is, another benefit is that they are easy to understand and plan for. There are a number of different types of fixed rate loans, such as FHA Loans, and WHEDA Home Loan Solutions. Contact our experts at ProVisor to learn more about fixed rate mortgage loans.