When obtaining a mortgage loan, you will be able to choose between either a fixed rate or a variable rate mortgage. There are pros and cons associated with each of these options, and many people will find that a fixed-rate mortgage is a very beneficial choice. Keep reading below to learn more about three of the benefits that fixed-rate mortgage loans have to offer. Taking the time to review these benefits can help you to determine if a fixed-rate mortgage is the right choice for you as well.
Benefit #1: Lock In Current Interest Rates
A fixed-rate mortgage allows you to lock in current interest rates for the life of your loan. This can be very beneficial if you choose to purchase a home when interest rates are low. If interest rates rise in the future, you will still be able to enjoy the lower rates until your mortgage is paid off. However, if interest rates do happen to drop even lower in the future, you may be able to refinance your loan in order to take advantage of these lower rates.
Benefit #2: Never Worry About Increasing Loan Payments
With a variable rate mortgage, your monthly loan payment can fluctuate during the life of your loan based on changes to the current interest rate. This can make it difficult to budget your finances effectively and can increase the risk that you will not be able to keep up with your mortgage payments. With a fixed-interest mortgage, your monthly loan payment will remain the same every month for the entire life of your loan. This can make it much easier to budget and allow you to avoid any surprise increases that could result in your inability to make your mortgage payments on time.
Benefit #3: Know Exactly How Much Your Mortgage Will Cost You
When obtaining any type of financing, it is important to know the cost of borrowing this money. This allows you to make sound financial decisions. Unfortunately, it is not possible to know the cost of borrowing when obtaining a variable-rate mortgage since the interest rate associated with this type of loan will vary over the years. With a fixed rate mortgage, you can determine the final cost of your loan including both the principal and interest charges. Having this information available will allow you to make a good decision regarding whether or not to invest in a particular property.Share