Buying a Home With a Fixed Rate Mortgage
When you buy a property, one major factor that determines the amount of money you will spend overall and what you will spend on your monthly mortgage payments is the type of mortgage rate you choose. A fixed rate mortgage has an interest rate that remains the same throughout the duration of the loan, and is a very popular way to help finance the purchase of a home. If you are interested in buying a home in Conyers, Georgia, and have questions about your mortgage options, Preferred Capital Funding can help. Continue reading to learn more about buying a property with a fixed rate mortgage.
What Is a Fixed Rate Mortgage?
There are essentially two main types of mortgage rate options, a fixed rate and an adjustable rate mortgage, (or ARM). In a fixed rate mortgage, the interest rate stays constant throughout the life of the loan, whereas with an adjustable rate mortgage, the interest rate of the loan periodically fluctuates. There are many term options available with a fixed rate mortgage, ranging anywhere from five to thirty years, and the longer the chosen term is, the lower your monthly mortgage payment will be. Many homeowners opt for a fixed rate mortgage because the monthly mortgage payments are fairly predictable, making for a more stable budget because borrowers know what they can expect to spend on housing each month.
The Benefits and Drawbacks Of a Fixed Rate Mortgage
There can be several advantages to obtaining a fixed rate mortgage, in addition to making it easier for a borrower to budget with the same payment amount each month. This loan type also can be considered a safer option if a borrower experiences an unexpected life event, such as a job loss, divorce or separation, etc., and with a fixed rate mortgage, you may be qualified for a larger loan amount because it is possible to have lower monthly payments if you are able to lock in at a longer term. Additionally, as you pay off the principal balance of the loan with each mortgage payment, you are increasing your home equity, which helps to also increase your personal net worth. You can also potentially pay off a fixed rate mortgage more quickly by making additional payments. It is important to note that fixed rate mortgages can have some possible drawbacks. The monthly mortgage payments mainly go towards paying off the interest in the initial years of this type of loan. Also, there is sometimes less flexibility with a fixed rate mortgage. You will ultimately want to work with your lender to figure out what the best type of loan is for your situation.
If you are ready to buy a home in Conyers, Georgia, contact Preferred Capital Funding today to determine the best financing option for your needs.
