Fixed Rate Mortgages have Mortgage Interest Rates that you and the lender determine in advance, and it will last until the loan is paid in full.
It is just one of many types of mortgage loans available, and as for today the most popular one.
The counterpart to these mortgages is Adjustable rate mortgages also known as ARM. ARMs usually have a slightly lower starting interest rate than the fixed rate mortgages, but after a certain period of time it changes and gets higher than this of the fixed-rate loans.
As the economy and housing market decline so do the Mortgage Interest Rates. Every time the government raises the interest rates on their loans to the banks, the banks do the same with their interest rates on the loans to their customers, and vidce versa. fixed rate mortgages may have a slightly higher rate than the adjustable rate mortgages (on the ARM's initial fixed-rate period), fixed rate mortgages are still usually better for the borrower to lock in a low fixed rate.
For instance, if interest rate on a fixed rate is 5% annually while an adjustable is 4.25% (for the initial period). In the first years the ARM would save you money. But, once rates go up, and they always do, interest rate on your adjustable rate mortgage will climb up to 7, 8 percents, sometimes even all the way to even 14% while the fixed rate mortgage still stands on 5%.
If you are buying a house, and planning on keeping it for the long term, a fixed rate mortgage is much better for you have than an adjustable rate mortgage - if it's a relatively low interest rate period. Adjustable rate mortgages are mostly used by buyers who buy the house and plan on selling it within a short period (a few years at most), enjoying the low interest rate on their loan in the first years, re-constructing it and raising its value for resell, or simply make large moprtgage payments every month to finish the loan faster.
In general, fixed rate mortgages are highly recommended and a lot safer to the average home buyer. Make sure you do your research before you chose a mortgage to lock in. find a loan that you qualify for and meets your needs with comfortable payments and a fixed interest rate - so that you don't have to worry about larger payments every month. seriously, you just bought a house. You have a lot of other things to worry about now.
Author Resource:
A great resource to help you in your continued research on Mortgage Interest Rates is ApproveAll.com They offer completely free and unbiased information about Fixed Rate Mortgage options, Mortgage Loans and a lot more.
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