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Fixed-Rate Home Loan Programs
Looking for a safe and stable home loan program? Then fixed rate home loan are the best option for safe and secure loans. There are no issues with the uncertain market rates, which fluctuate from time to time.
What Is A Fixed-Rate Mortgage?
As the name suggests, the loan has particular rate of interest fixed for the entire term period. The fixed rate home loan offers a fixed interest rate that remains the same for the loan’s entire life.
Your monthly down payments will stay the same throughout your loan life. And most importantly, it would not increase though the market rate may increase or decrease.
Fixed-rate home loans are popular mortgage programs. Since there are no fluctuations in the interest rate, they bring financial stability and peace of mind. It helps to plan the monthly budget and brings financial independence due to the known amount of down payments.
How Is The Interest Rate Locked?
Since the repayment amount will be the same till the loan term, you can choose the loan term period. Mostly, the fixed-rate home loans are 30-year loan terms, but you can apply for a 20-year, 15-year, or even 10-year loan term.
You may see variable interest fluctuating day by day. The lenders advertise to give the best interest rate, but once the loan is locked, the down payment may differ.
However, in fixed-rate home loans, once you close the interest rate, it remains the same throughout the loan term period. This also refines your required repayment into two parts – The first one goes to the principal balance while the second moves towards the interest charged.
With time, your equity over the property will increase till the end of the loan life. You could quickly refinance or ask for the new fixed rate once your fixed rate term expires.
Is It Easy To Qualify For Fixed Rate Mortgages?
For conventional fixed-rate mortgages, a minimum credit score of around 600 with a Debt to income ratio (DTI) of no more than 43 percent. However, the requirements by the lenders are stricter in the case of fixed-rate mortgages.
The borrowers must have a certain income and savings to pay a fixed amount every month. Lenders ask for documents such as your past two months’ bank statements, previous month’s pay stubs, credit report, and bill payment timeline to determine your financial qualification.
Fixed-rate home loans can be issued by any bank, mortgage company, credit union, or private lender. The interest rate varies a little from bank to bank and to other lenders.
Typically, people look for a 30-year loan term with a fixed interest rate. This gives you the whole scenario that in 30 years, how much you will be paying interest and principal balance.
If you look for a low-interest rate, you have to reduce the term period of the loan. A 20-year or 15-year loan life would be a better choice. This will ensure a low-interest rate, but your down payments will increase. This is ideal for borrowers with a good ash flow who want to own the home equity faster.
Different Types Of Fixed-Rate Mortgage
There is not only a single fixed-rate mortgage. Several other types of fixed-rate mortgages are also present in the market. You can choose according to your requirements.
Some of them are listed below:
- Conventional Fixed-rate mortgage
- Conforming
- Non-conforming
- Amortizing
- Non-amortizing
These are some of the highly asked-for fixed-rate mortgage programs by borrowers. The Conventional fixed-rate mortgage is slightly strict towards the financial requirements of the borrowers. It needs a good credit score with a DTI ratio under the limit.
The majority of people go for amortizing loans. In this, your monthly payment goes towards both your principal and interest charges. It helps in building your home equity over the loan life.
Advantages Of Fixed-Rate Home Loan
The following are some fixed rate home loans against other mortgages:
Some of them are listed below:
- Provides financial stability
- Fixed interest rate- This signifies a constant down payment
- Helps in planning the monthly budget due to predictable mortgage repayment.
- Flexible loan life
- Provides protection when interest rates become high.
Since the world is ever-changing, you must choose which mortgage loan program is best for you. The fixed-rate mortgage offers financial stability and certainty to your finances. Though it’s not easier to qualify for fixed-rate home loans, it protects you in uncertain market conditions. It all depends on your choices and what suits you the best.
Begin your home loan process today! Our mortgage advisors are standing by. Request a free personalized rate quote.
