A fixed mortgage is designed to give you the same interest rate that you signed up with for a set period of time. They are usually either 15 year mortgages or 30 year mortgages. A 30 year fixed mortgage will provide you with more money left over each month than a 15 year mortgage. If you want to pay off your mortgage over a longer period of time, you should take out a longer mortgage. Also the longer that you pay the mortgage back, the more interest you will pay overall.
Some fixed-rate mortgages only offer a fixed rate for just one year. Such offers are usually designed for high-risk customers who might not otherwise qualify for a loan. The interest rate is usually quite low to start with but this “teaser rate” does not last long. When the fixed interest rate has run its course, the rate goes on to fluctuate in correspondence with the housing market. Sad to say, that’s not always what you want to have happen. Naturally, one disadvantage of carrying a fixed mortgage is that you will decrease your odds of getting a lower interest rate in the event the housing market enters a slump. If you have an adjustable rate mortgage, the current economic status of the housing market will highly influence rate figures.
The best part of a fixed mortgage is that your monthly installment is decided in advance. If you’re trying to stick to a budget, a fixed rate mortgage guarantees against your payments each month increasing precipitously. Many people fall into the trap of taking on an adjustable rate mortgage when they cannot afford any significant change in their payments. However, if you take out a “fixed” mortgage loan, you are informed in advance as to what the precise amount of your monthly payments will be.
For more information, be sure to visit www.fixed-mortgages.org.