Fixed Rate Home Loans
The most common fixed rate mortgages are for a term of fifteen
or thirty years. These mortgage loans are simply loans
with a fixed interest rate amortized over the term of the loan
so neither the payment nor the rate change at anytime during
the life of the loan. These loans were at one time the
only mortgage loans available to borrowers. Recently
lenders have added 40 year and even 50 year amortization
periods to reduce the monthly payment. Because the
average life of a residential mortgage is less than five years
in America, having a thirty year mortgage may sometimes be
unnecessarily expensive. However, if you intend to stay
in your home for a long time this may be the best loan for
you.
A fixed rate mortgage loan can have an interest only option for
up to ten years, for a lower initial payment. The rate
remains fixed for the entire term of the loan. The
payment changes once the interest only period is over in order
to pay off the loan over the remaining period of time.
Ten years ago, perhaps 90% of residential mortgage loans were a
fixed rate program. In today’s increasing
expensive real estate market many borrowers are opting for
a lower monthly payment by exercising other mortgage loan
options.
