Have you decided recently to purchase a home? In today’s market, there are a variety of different ways to finance it. Though it is probably the simplest and most ideal method to purchase a home, cash isn’t always the most realistic of options for most people. Mortgages are much more realistic, though. Today’s home buyer is bound to find one which suits their needs, because they are available in numerous forms.
One of the most popular alternatives people choose is a fixed-rate mortgage. This is a mortgage where monthly payments remain static over time. The mortgage can be paid back over a certain period of years, from 10 to 50. Most people tend to choose the most typical option, which is an amortization period spread out over 30 years.
You will find that among the main benefits to choosing a such a mortgage is how secure it is. Unlike other mortgage alternatives such as adjustable-rate mortgage, fixed-rate options allow the home buyer to pay the exact same monthly charge over the life of the loan. Note that other alternatives may initially start you off at a reduced monthly payment but its amount will escalate over time, particularly with an adjustable-rate mortgage. Ultimately the interest rate will escalate, potentially to an amount that is not feasible for the buyer, despite the initial payments being lesser on adjustable-rate mortgages. Fixed-rate mortgages ensure that this is something which you will never need to stress about.
A second benefit of fixed-rate mortgages is that they provide guarantee. Even if the interest rate in the current market rises, the amount you will need to pay from month-to-month on your mortgage will stay the same. You may also make the choice to refinance with a lower interest rate at any time if the interest rate decreases. This ensures a buyer the very best situation. Other mortgage options do not provide this much guarantee.
You will notice that the third benefit to a fixed-rate mortgage is its unequaled flexibility. While additional principal payments are never required, buyers can opt to pay more to reduce the total length of their loan. Adding just one extra monthly payment a year adjusts a 30 year amortization period down to about 26 years, saving you 4 years off your total loan. The amortization period decreases to about 22 years if you are going to pay half your monthly mortgage bi-weekly.
You may be among the many house owners who see fixed-rate mortgages as a safe and sensible alternative. If you’re searching for a mortgage that continues to be stable all through its whole term and provides a considerable amount of guarantee and flexibility a fixed-rate mortgage might just be your best bet.