Fixed mortgage rates mean consistent payment plans and predictable payment amounts. This stability can be very attractive to some borrowers. At the same time, fixed rate mortgages can be a double-edged sword. It all depends on the kind of debt repayment plan that works best for you.
Here’s what you need to know about fixed mortgage rates:
Debt is the last thing anyone wants to be surprised about. An unexpected increase in your payment plan can be extremely inconvenient to budgeting goals, which is why many people choose to invest in a fixed-rate mortgage. This mortgage structure has the benefit of being predictable, which is actually refreshing in the world of finances. When you have an adjustable-rate mortgage, an increase in payments can blindside homeowners.
This loan structure is easy to understand; first time borrowers are less likely to get suckered by a sneaky interest rate increase. On paper, a percentage increase in your rate payment might not seem that intimidating. But in real life, the extra money every month can be drastic. An adjustable rate mortgage can have benefits, but it is structurally more difficult to understand for beginning homeowners. A fixed rate mortgage provides a simple, predictable financial forecast.
No matter what type of loan you commit to, the future is unpredictable. Down the road, many homeowners reevaluate priorities and decide to refinance their mortgage. This can happen for a number of reasons, but if it should become a realistic option for you, you might be thankful you invested in a fixed rate mortgage. With a fixed rate mortgage it’s typically easier to see what you owe and how to refinance to take advantage of new market interest rates.
If you are trying to decide which mortgage rates are right for you, learn more from our professional team at Midland Mortgage.