The fixed-rate mortgage (FRM), one of the most common types of mortgages offered by lenders, comes with several benefits, including security and protection against unstable interest rates. However, like any other type of home loan, it may not work for everyone.
When a Fixed Rate Mortgage is Right for You
A fixed rate mortgage is a good choice when you plan to own the home for a long time. FRMs usually come in 15- or 30-year terms (some lenders offer 20 and 25 years), which means that agreeing to the loan locks you in a long-term contract. With this kind of agreement, it’s best to have the security and protection against sudden increases in interest rates.
Other Reasons You’d Want a Fixed Rate Home Loan
Experts predict mortgage rates will rise by 2016 and well into the next decade. And with the housing market still suffering from the effects of The Great Recession, many of the factors that influence property prices and interest rates are still unstable. All these make FRM an ideal option, especially if you’re thinking about your future.
When an FRM Is Not a Good Choice
It doesn’t make sense to get a fixed rate mortgage if you only plan on short-term ownership of that property you want to purchase. In this case, City Creek Mortgage says you should consider getting an adjustable rate mortgage (ARM) instead. With an ARM, you get to enjoy lower introductory interest rates.
Since the home buying process is complex and difficult to predict for non-experts, work with the right mortgage company in Salt Lake City. On top of that, do your homework and find ways to raise your chances of securing the best possible loan.