Fixed-rate mortgages include 10-year,
15-year, 20-year, 30-year, 40-year and even 50-year mortgages, all
of which are completely amortized.
The primary benefit of a fixed rate
mortgage is that your payment will remain the same for the life of
your loan. Also, they are easier to understand and are pretty
standard from lender to lender.
However, keep in mind that interest
rates can go down and when that happens you may want to consider
refinancing. The drawback would be the additional cost and paperwork
to do so.
If you expect to be in the home less
than five years, a fixed-rate mortgage may not be your best option.
Remember, you may want to consider an adjustable rate mortgage or ARM
because when interest rates lower your loan will automatically
recalculate.
Always work with a reputable lender to
compare rates and make sure you receive a Good Faith Estimate.
Also, don't hesitate to ask questions.
"There is no such thing as a stupid question." You need to have a
clear understanding of the lending package you are considering,
whether it be a fixed-rate mortgage or an ARM. Lenders are required
to give you written information to assist in comparing and selecting
a mortgage.
