Fixed Rate First Mortgages: Get out of Your Adjustable Mortgage Now!
Enjoy Stability and Fixed Payments with a Fixed Rate First Mortgage Loan
You should really give serious thought to a 30-year fixed rate home mortgage loan if you are in the market for your first home or plan to stay in your home for longer than 7 years.
Having said that, we'd also like to warn you against the possible pitfalls of an Adjustable Rate Mortgage loan (ARM) for reasons that we'll explain shortly.
Here are the major advantages of a fixed rate home mortgage loan:
Double Advantages
Your monthly payments never change for the life of the loan. Paying a fixed amount every month not only brings stability and rationality to your budgeting but it also decreases the percentage of your income paid for mortgage if and when your income goes up.
For example, if you are paying $1,000 today for your fixed rate mortgage payment and you are making $5,000 a month, it means you are paying 20% of your income on your home mortgage.
Imagine getting a raise and starting to take home $6,000 a month within 5 years. Your mortgage is still $1,000 a month but now it represents only 16.6% of your monthly income and that's a good thing.
2) Due to 30 year amortization, your monthly payments in the long run will be lower than what you'd pay on an Adjustable Rate Mortgage loan (ARM).
An ARM might actually start with a lower interest rate and lower monthly payments but you never know when the interest rate will skyrocket.
Thus with an ARM, you would be leaving yourself exposed to all kinds of surprises in the future. Especially if you are living on a fixed income or do not have the prospects of increasing your income significantly any time soon, you would be advised to go with a Fixed Rate First Mortgage.
Two Other Factors to Consider
We recommend you take into consideration two other factors when shopping for a home mortgage loan: how long are you intending to stay in your house, and what are the general trends in interest rates?
Most Americans move once in every 6 years. If you are intending to stay 10, 15 years or even longer, then a Fixed Rate First Mortgage would be excellent since it would provide you with the opportunity to enjoy your house at the same predictable and fixed monthly payment.
Secondly, in times when the interest rates keep falling, it might make more sense to consider an ARM because of the possibility that your future interest rates may drop.
However, currently we are living in a period when the interest rates are actually inching their way UP and not down.
Thus there is a realistic chance that, with an ARM, you might be facing higher interest rates and thus higher monthly and overall interest payments in the future.
This is another excellent reason why you should stick with a Fixed Rate First Mortgage loan if you are in the market for a house today or need to refinance.
Many Possibilities Available
There are many other variations to fixed rate loans including a 15-year loan, bi-weekly payment loan, the fixed/adjustable rate loan which starts as fixed rate but switches to adjustable rate in the future, and the interest-first fixed rate loan in which you only pay the interest and none of the principal during the first 10 or 15 years of your fixed rate mortgage loan. This will give you even a lower monthly payment than your typical 30-year fixed-rate loan at the cost of higher monthly payments in the later years.
There are many financing possibilities available for you today though the rich variety of Fixed Rate First Mortgage loans that we administer on a daily basis here at the Mortgage Wizards, Inc.
Call us TODAY at (877) 310-FUND for a free and strictly confidential consultation to see how we can help you better.
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