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Back in Style: The Fixed Rate Mortgage

Buying a home for the first time is a huge undertaking that usually involves a huge price tag. 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; 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 interest-only mortgages, fixed rate mortgages, balloon mortgages, and adjustable rate mortgages.

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 have any unpleasant surprises to worry about when the bill comes due. Further, 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 including 15-, 20-, 25- and 30-year. With the rising cost of homes, 35- and 40-year terms are becoming all the rage, and offer viable options 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.

Next: Think You Can’t Afford a Home?
The Fixed Rate Mortgage 1
The Fixed Rate Mortgage 2
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