What is a Fixed Rate Mortgage?
A fixed rate mortgage is a loan in which the interest rate remains constant over the life of the loan. The most common fixed rate mortgages are 15 and 30 year terms, although 10, 20, and 25 year terms are also available.

Fixed rate mortgages are popular in the U.S. because interest rates are constant over the life of the loan and people like the predictability and stability of fixed rate mortgages.

Pros and Cons of Fixed Rate Mortgages
A fixed rate mortgage will have a higher interest rate than adjustable rate mortgages (ARM), and 30 year fixed rate mortgages will have a higher rate than a 15 year mortgage. This is because the lender is taking a bigger risk locking in a rate, trying to forecast economic conditions 30 years in the future.

Considering the rates for a 30 year fixed mortgage is at the lowest it has been in years it’s no wonder so many potential home buyers opt for this type of loan. It’s by far the most popular type of loan issued and for good reason. It offers the security of knowing the payment will start low and remain low for the life of the loan.

Choosing a shorter term 15 year loan will increase your monthly payment, but lower the overall interest paid on the loan. If you are able to manage the monthly payments of a 15 year loan, you can save a significant amount of money over the life of the loan, and benefit by having your house paid in full 15 years earlier.

If you expect to be in your home for 5 years or less, an adjustable rate mortgage (ARM) may be a more cost effective alternative than a fixed rate mortgage. If you expect to be in your home for longer than 5 years, a fixed rate mortgage is usually the better choice.

Making the Choice
As always your payment will be based on the interest rate you receive, the total amount of the loan and the actual interest amortized over the total term of the loan. It’s important to remember to choose a payment that fits comfortably within your budget while providing the most value for your dollar.

Our expert loan officers will work with you closely to help you make the right decision.

$1000 Monthly Payments – How Do the Numbers Add Up For You?
For most people, determining how much they spend on a home comes down to how much money they can dedicate to monthly payments. You can approach this calculation in a couple of different ways. And what you decide really depends on your mindset in how you view a home. Below are examples of how 2 different families may manage $1000 monthly house payments.

15 Years for the Budget Minded Family
A young, budget minded couple with a long term focus may want to pay off their home as quickly as possible. They will probably be interested in a 15 year mortgage, with a manageable monthly payment.

The budget minded couple will be able to afford a $135,000 home to stay within their $1000 monthly budget, while working toward their 15 year plan. At 4.26%, their home will be paid in full in 15 years, with a manageable $1016 monthly payment. They will pay total interest of $47,927.

30 Years For the Aspirational Couple
On the other hand, someone with more of an aspirational focus may want to get as much house as their monthly payment will allow. In this case, a 30 year mortgage may be more attractive to them.

With a monthly budget of $1000, the aspirational couple will target homes in the $190,000 range. A 30 year mortgage at 4.81% of this home will be about $998 per month.

Over the life of their loan, the aspirational couple will pay a total of $169,285 in interest and will have the $1000 monthly obligation for 15 years longer than the budget minded couple.

Our expert loan officers will work with you closely to help you make the right decision.

Call 1-877-867-00279 or apply online to get started on your path to becoming a home owner.