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The Fixed Rate Mortgage
Buying a home for the first time is a huge undertaking that usually involves a huge price tag as well. In addition to narrowing your choices of homes down to the one that you plan to buy, you must also decide which type of mortgage to apply for in order to pay for it.
Neither process is simple, although deciding which type of mortgage to get is probably going to be much less demanding on your nerves, time, and energy. The type of loan that you get is going to be dependent upon several things. More specifically, the price of the home, the size of your down payment, and your income level can all come into play when deciding whether you will take out a single mortgage or two mortgages.
Additionally, these things will also influence your decision as to which type of mortgage you will obtain. After all, the choices are many and include fixed rate mortgage, adjustable rate mortgage, interest-only mortgage, and the balloon mortgage.
The fixed rate mortgage, the one that will be discussed here, is the traditional choice. The fixed rate mortgage gained its popularity due to the fact that the monthly payments are always the same so homeowners never had any unpleasant surprises to worry about when the bill came due.
Plus, the interest rate remains steady over the course of the mortgage. This is especially beneficial if the homeowner is able to secure a low interest rate at the time of the mortgage origination.
Fixed rate mortgages are available in a variety of terms... Silver State Schools Credit Union offers 10, 15, 20, 30 and 40-year terms. With the high cost of homes, the longer term has come into vogue and offers a viable option to new homeowners for keeping their monthly payments reasonable.
With a fixed rate mortgage, the shorter terms equate to less money spent on interest charges over the life of the mortgage but mean larger monthly payments. The longer terms equate to more money spent on interest charges over the life of the mortgage, but with smaller monthly payments.
