Title:
Advantages of a
Fixed Rate Mortgage
Word Count:
400
Summary:
This is the most
popular type of mortgage as the monthly payment for interest and principal
remains fixed through out the mortgage term, Property Insurance and taxes may
increase but the monthly repayment of the amount will be stable.
Keywords:
finance, loans,
mortgage, lender
Article Body:
This is the most
popular type of mortgage as the monthly payment for interest and principal
remains fixed through out the mortgage term, Property Insurance and taxes may
increase but the monthly repayment of the amount will be stable.
Fixed rate mortgages are available for 10 years, 15 years, 20 years and 30
years period of time, there are also fixed rate mortgages available “Biweekly”
this helps to shorten up the loan by making the payment every two weeks.
Fixed rate mortgages have 2 distinct features, first one is that the interest
rate would remain the same through out the term of your mortgage, second
feature is that payment of the loan remains
level for the life and are structured for the repayment of the loan at
the end of the mortgage term.
The most popular fixed rate loans are 30 years mortgage and 15 years mortgage.
During early payment period, a large amount is being taken for the interest and
the rest goes off to the balance principal amount, for instance a 30 years of
fixed rate mortgage will take 22.5 yrs of the level payment of the loan for the
payment of the half of the mortgage amount. Under 30 years of mortgage, month
after the month you can choose to pay only interest or you can pay off
principal with interest as it is a great option available for those who have
tough time for money at times, with this option of lowering the payment you can
increase the cash flow for paying off interest bills, remodeling your house,
financing schools or college needs or increase your retirement savings.
With Fixed rate mortgage your loan rate is fixed for the mortgage term, you can
pay interest only for 10 years and pay the balance interest plus principal for
the next 20 years, this helps you to refinance the loan with out any pre
payment penalty.
The advantages of 30 years mortgage is, when it is compared with 15 years
mortgage the monthly payments are lesser, interest rate remains the same even
if the interest rate goes up, monthly payment does not increases as it remains
the same for the entire 30 years, compared to 15 years mortgage you would be
paying higher rate of interest and the interest rate remains the same even if
the interest rate gets decreased.
If you have planned for a long-term loan and does not like to take up the risk
you may opt for fixed rate mortgage.