Mortgage Loans – Part 1 Fixed Rate Mortgages

Mortgage Loans – Part 1

Fixed Rate Mortgages

There are so many mortgage options, it’s overwhelming, so we will highlight 9 of the most common types of mortgages in this series. The first is the most straight forward, and is probably the type of loan your parents had on their house: the fixed rate mortgage.

Fixed Rate means that you sign a contract for a certain annual percentage rate (APR), and you pay that for the life of the loan (until the mortgage is completely paid off). It also means that they figure the total cost of both the house and interest and divide the amount up into equal portions that you pay every month.

Typical lengths of mortgages you will see with a fixed rate are 10, 15, and 30 years. A lot of people like this option because they know that their mortgage will be X amount of dollars every month, and it’s easy to budget.

A fixed rate mortgage is good for home buyers who plan to settle down and live there for a while, usually 10 years or more. Other loans don’t have you pay as much the first few years, so if you will only be living in a house for a couple of years, another type of mortgage might be for you.

However, circumstances often change, and with fluctuations in the housing market, be careful not to get stuck with a mortgage that you can afford now, but you can’t afford in the future if you are not able to sell the house right away. Always make sure to have a certified loan officer clearly explain the terms of every loan for you so you know what your responsibility is.