When it comes to buying a home, you can trust the loan experts at Homeowners Mortgage to help you choose the right kind of loan. Thinking about a fixed rate mortgage? Contact us today to get started or read on below for an overview of the pros and cons.
Fixed rate mortgages provide borrowers with stable monthly payments for the principle and interest of the loan during the entire term of the loan. These types of mortgages are available to borrowers who borrow for 10, 15, 20, 25, or 30-year cycles. Fixed rate mortgages are fully amortized, meaning they are paid in full at the end of the loan terms as opposed to having a large balloon payment due at this point.
While this is an attractive mortgage option for many people, the tradeoff is that the monthly payments may be higher than they would be in the initial term of an adjustable rate mortgage or ARM. However, the payoff is that the rate is not subject to market rate fluctuations, meaning your rate will never increase. With an adjustable rate mortgage, lower initial costs often give way to higher rates throughout the life of the loan.