Fixed-Rate Mortgages

What is a Fixed-Rate Mortgage?

This type of mortgage loan has a steady interest rate that won’t change, even if market interest rates fluctuate up or down. Your interest rate can be locked in by your lender when you reach a certain stage of the home loan application process.

Lenders offer higher or lower mortgage rates based on a variety of factors, including your loan term, your down payment, your credit score, and whether or not you can reduce your interest rate by purchasing “points” at closing.

A fixed mortgage is usually set for a 15- or 30-year term. If needed, a shorter period of time like 10 years or mid-range terms like a 20- or 25-year mortgage can be obtained. A 30-year fixed rate mortgage will mean lower monthly mortgage payments, but you’ll pay much more interest over those years compared to a 15-year fixed rate mortgage.

Fixed vs. Adjustable-Rate Mortgages (ARM)

An adjustable-rate mortgage (ARM) is assigned an interest rate according to the mortgage rates when your loan originated. However, your monthly payment is subject to change without notice, increasing or decreasing over time as mortgage rates go up and down.

This means that an ARM can be a gamble. If interest rates go down, you’re in luck, as you’ll pay a lesser amount of interest. If interest rates go up, you could end up paying tens of thousands of dollars more over the loan term than you originally thought.

Is a Fixed-Rate Mortgage Right For You?

There is no one-size-fits- all loan program. It is important to discuss the details of your current financial situation with a qualified Loan Officer who can advise you about all of your options available.