First developed by the Federal Housing Administration, the fixed rate mortgage is one of America’s most popular mortgages. The popularity of fixed rate mortgages is due to it’s unique benefits compared to other mortgages (such as variable mortgages). However, a fixed rate mortgage may not be everyone’s preference. To help you decide if a fixed rate mortgage is right for you, here are three benefits of a fixed rate loan
1. Lock: Unlike some mortgages, a fixed rate loan ‘locks’ or stays the same.This means the interest rate will remain the same on the note through out the loan. This is one of the major attractions of fixed rate loans. Since the loan does not float, this let’s the customer feel more at ease as they won’t suddenly need to pay more each month.
2. Loan Term: Whatever your desired amount of time maybe for you term, a fixed rate loan allows you to choose what is desirable for you. While the most common terms are 15 or 30-year mortgages, shorter terms are also available and for those who want longer terms 40 and 50-year mortgages are also available and are common in areas with high priced housing.
3. Prepayment: In the U.S., a fixed rate mortgage offers the ability the prepay capital early without a penalty. When you pay early, part of the principal reduces the total interest paid. This will allow you to shorten the amount of time needed to pay off the loan!
While it may not be for everyone, a fixed rate loan can be a great benefit to many. If having a mortgage with a fixed interest rate and allows you to choose the length of the term desirable to you, then a fixed rate mortgage may be just what you are looking for.
For all of your Loan planning needs which include Fixed Rate Loans, We at American Capital Mortgage would like to help you save money and keep your home loan process easy and quick!
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