A fixed-rate mortgage is one of two main types of home loans. Your other option is an adjustable-rate mortgage. Within these two categories, I can offer you a loan tailored to your needs. But, choosing between a fixed and an adjustable rate is one of the first decisions you’ll make when you’re looking for a loan.
Whether you’re a first-time homebuyer or shopping for your retirement home, I want to help you find the best loan for your budget and lifestyle. Call me, Timmy Ostrom, and together we’ll look at the pros and cons of a fixed-rate mortgage.
A fixed-rate mortgage has a set interest rate that doesn’t change. An advantage of this type of loan is that you’re protected if interest rates should rise. No matter how much the market fluctuates, your rate and payments will remain the same.
You can count on a steady monthly payment. Knowing how much you’ll owe makes budgeting easy and gives homeowners peace of mind. Your mortgage payments stay the same, but the percent of the payment that goes to interest or principal changes over time.
In the first years of homeownership, your payments will go mostly toward the interest on your loan. Gradually, the money will go more toward the principal of the loan. Even though the amount paid on interest and principal change over time, the monthly total is always the same.
Not everyone is a numbers person. If interest rates, principals and percentages make your head spin, don’t worry. I’ll make sure you understand how to choose the options that work to your advantage.
Fixed-rate mortgages are available for many loans. I offer several options with low or zero down payments. Here are some of the loans to consider:
The Chenoa Fund – This down-payment assistance program helps homebuyers who don’t have a down payment. It’s an FHA-insured plan that’s ideal for millennials and anyone who can afford a monthly payment but doesn’t have savings for a down payment. There is no income cap or geographical restrictions to qualify for this program.
FHA Loans – The Federal Housing Administration insures these loans. Many first-time homebuyers and low-to-moderate income buyers can qualify for an FHA fixed-rate loan. Adjustable rates are also available.
VA Loans – These loans help veterans, active service members and eligible surviving spouses obtain a home loan. VA Loans feature money-saving benefits and are available with fixed- or adjustable rates.
USDA Loans – If you want to buy outside the city limits, a USDA Loan may be right for you. With low-interest rates and closing costs, these loans are eligible for certain suburban and rural areas.
Conventional – For homebuyers with good credit and a down payment, a conventional loan is an excellent choice. You’ll face few restrictions and could qualify for a low-interest rate on a 30-year fixed-rate mortgage.
A fixed-rate mortgage protects you from rising interest costs. If you’re going to live in your home for a long time, this type of loan may be your best choice. With predictable payments, you can make long-term budgets and plans. I’ll do my best to get you the lowest fixed-rate mortgage available.
For homebuyers who intend to move within a few years, a fixed-rate might still be a good option, but I may be able to find you a more suitable loan with an adjustable rate. A lot depends on your circumstances and the current market conditions.
While the interest rate and monthly payments will always be the same, you have flexibility in other features of your loan. For example, the term or amount of time you have to repay the loan varies.
Depending on the type of loan you choose, you may have 10, 15, 20, 25 or 30-year loan options. The lower the term, the higher your monthly payments.
A 30-year fixed rate mortgage is among the most common loans because monthly payments are affordable. With a 10-year fixed rate mortgage, you can build equity quickly because your monthly mortgage payment is high.
The total amount of interest you’ll pay also varies with the term of your loan. Interest rates are higher as the loan term gets longer. For example, the overall cost of a 30-year loan is more than that of a 20-year one. If you’re comfortable with a higher monthly payment, you may want to consider a 20-year or shorter term.