Fixed Rates Mortgage
There are many different mortgage products available to individuals who are planning to purchase a new home or do a mortgage refinance. Some of the more popular loan products are the fixed rates mortgages. If you are toying with the idea of making a home purchase, you should know more about these types of mortgages and mortgage refinancing.
As you can probably decipher from the name of this loan product, fixed rates mortgages have fixed, or frozen the interest rate for the duration of the term of the loan. Interest is charged by banks and other lenders to cover the cost of processing your loan and lending you money, as well as to make it profitable for the bank so that they will have a reason to lend money.
Adjustable rate mortgages have their interest rates tied to the moving markets on Wall Street, and that is why the rates adjust so frequently. Alternately, a fixed rate is connected to the prime rate at the time that it is offered, but once you lock it in, it stays at that level. For instance, the interest rate may be fluctuating between 4.5 and 5%, and you are able to lock it in at 4.75%. That is the rate you will be charged on the money you have borrowed for the entire 30 years you have the loan.
Of course, 30 years is probably the most popular term for fixed rates mortgages, but you could also get one with a term of 15 or 20 years. The main point is that when an individual gets a fixed rate mortgage they can count on their payment remaining the same month after month. FHA, VA, and conventional loans all have fixed rate products, so you have quite a few choices. Having a low fixed rate can really help if you are currently in a bad credit mortgage with a higher interest rate, so mortgage refinancing to a new fixed rate mortgage is an excellent way to adjust the term back to 30 years at a lower interest rate so that you payments are much lower.
With interest rates staying low, now is a great time for a person to do a mortgage refinance or to purchase a home. The fixed rates mortgages have been around for many years and have been proven to work for many people. Talk to your lender to see if now is a good time for you to go through the application process for one of these loans for your new home or mortgage refinance.