Fixed Rate Mortgage Loans - Understand the Pros and Cons of the Fixed Rate Mortgage

There are many benefits and drawbacks to consider when deciding if a fixed rate mortgage is right for you. It is important to look at all options when it comes to something as important as getting a mortgage for your new home.

There are a few benefits to fixed rate mortgages. One benefit is that the rates and payments remain constant. There won't be any surprises even if inflation surges out of control and mortgage rates head to 20%. This kind of stability makes budgeting easier. People can manage their money with more certainty because their housing expenses won't change. Fixed rate mortgages are simple to understand making them appealing and good for first time buyers. Also longer term fixed rate mortgages are very affordable.

There are also a few drawbacks to fixed rate mortgages. To take advantage of falling rates, mortgage holders would have to refinance. That can mean a few thousand dollars in closing costs, another trip to the title company's office and several hours spent digging up tax forms, bank statements etc. Fixed rate mortgages can be too expensive for some borrowers, especially in high rate environments, because there is no early on payment and rate break like there is with adjustable rate mortgages. Fixed rate mortgages are practically identical from lender to lender. While lenders keep many adjustable rate mortgages on their books, most financial institutions sell their fixed rate mortgages.

There are a few other important questions you should make sure you have answers to when deciding which type of mortgage is better for you. How long do you plan on staying in the home? How frequently does the adjustable rate mortgage adjust, and when is the adjustment made? What's the interest rate environment like? Could you still afford your monthly payment if interest rates rise significantly? Do you know the main pros and cons for each type of loan?

Generally, fixed-rate mortgages are a safer way for first time home buyers to get a mortgage. There is greater stability and less risk involved. It is easy to budget and regulate your expenses when you know exactly what your interest rate will be.

To view our list of recommended mortgage loan companies online, visit this page: Recommended Mortgage Loan Companies Online.

Carrie Reeder is the owner of ABC Loan Guide. It is an informational loan website, with informative articles and the latest finance news.

I want to refinance my mortgage, but the value of my house has fallen
St. Louis Post-Dispatch,  United States - 7 hours ago
I really want to refinance my mortgage, which I got about three years ago, but I think my house price has declined. What can I do? ...

Single mom should refinance her mortgage
Globe and Mail, Canada - Jul 5, 2008
She also has a $114000 mortgage. Finally, she expects an $82000 repayment of a personal loan that is due to her in a year. Karen should make as much of her ...

CNBC
UPDATE 1-US mortgage refinance applications plunge -MBA
Reuters - Jun 18, 2008
... rates choked off refinancing opportunities and soured the housing outlook, an industry group said on Wednesday. The Mortgage Bankers Association said ...
US MBA's Mortgage Applications Index Fell 8.8% Last Week Bloomberg
Mortgage applications down 8.7% last week: MBA MarketWatch
Weekly mortgage applications fall 8.7% as rates rise BloggingStocks
Housing Wire - WFMJall 61 news articles

THE DEBT ADVISER: Ignored debt grows and damages many parts of ...
Quad City Times, IA - 12 hours ago
Second, your mortgage-refinance issue is just the tip of the iceberg. Many people don’t know that a negative credit history will also hurt you if you have ...

Tips on obtaining money through refinancing
Fall River Herald News,  USA - Jul 3, 2008
Here are a couple of pointers for those considering mortgage refinance to take cash out of their home: The traditional way of judging the market value of a ...

Los Angeles Times
Bitter lessons learned from refinancing
Los Angeles Times, CA - Jul 4, 2008
Miller said she was persuaded to refinance her mortgage twice into sub-prime loans she didn't really understand, along with taking out a second mortgage. ...

Flashback to birth of the mortgage disaster
Sydney Morning Herald, Australia - 2 hours ago
If interest rates fell, there was a big chance that mortgage holders on which the bond was based would refinance on lower rates. For the owner of the bond, ...

New York Times
Mortgage Brokers as Naysayers
New York Times, United States - 18 hours ago
During the recent real estate bubble, some borrowers who chose loans with skyrocketing interest rates emerged unscathed because they were able to refinance ...

With the loan bar higher, the rules are different now
MiamiHerald.com, FL - 9 hours ago
Homeowners who currently have an adjustable mortgage can refinance into a fixed-rate mortgage so they don't have to worry about rising mortgage costs after ...

Best Syndication
Low Credit Score Home Mortgage Loan Refinancing
Best Syndication, CA - Jun 30, 2008
In any case, what you need to do is make sure that the terms of the mortgage refinance loans that you are being offered match your needs and will produce ...
Avoid Financial Mistakes When Young And Have a Successful Future Best Syndication
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