Fixed Mortgage

Is a Fixed Mortgage or Adjustable Mortgage Right for You?

Real estate is a hot topic these days. Housing prices have skyrocketed to levels never before thought possible. In some markets they're considered ridiculously high, but no one expects that to change any time soon…if ever. It's a new era, and lenders are adjusting accordingly. If they didn't come up with creative financing ideas, the American dream of owning a home would fly out the window for numerous prospective buyers. There are all sorts of mortgage loans available. One of the first questions to settle is whether you should apply for a fixed mortgage or one with adjustable rates.

A fixed mortgage is just that. When the homebuyer gets ready to actually buy a property, they lock in the interest rate with their mortgage broker or lender. Once they sign on the dotted line, the rate will remain the same for the life of the loan. One thing to note is that some unscrupulous lenders will agree to a specific lock and then raise it before the home purchase closes. Be sure to get the lock agreement in writing and then carefully examine each document at closing to make sure nothing has changed. Even a quarter or half percent may affect what you pay by thousands - or even tens of thousands -- of dollars over the lending period.

For many years just about every mortgage was written for thirty years. For one thing people tended to remain in the same house for many years; often for life. For another, prices were more in line with income and there was no need for all the various loans available today.

A lot of homebuyers start out with adjustable rate mortgages (ARM). With these loans the interest rate adjusts with the market at various intervals. At the end of the designated period (i.e. one, five, seven, etc.) years, it becomes a fixed mortgage. The idea is to help people with poor credit, little or no down payment, or those that only plan to stay in the home a short while qualify for an affordable mortgage. When their finances improve or they decide to stay, they generally refinance and lock into a fixed rate.

People in good financial shape usually take out a fixed mortgage. They qualify for the best rates and they can also buy points to make it even lower. When interest rates start going down, as they inevitably do, they refinance at an even lower rate. In fact in really volatile markets, those who can afford to, often buy several houses either as investments or to turn over quickly to make some fast money.

By completing the application on this page, we'll connect you with reliable mortgage lenders and pre-screened home loan companies who can provide options so you can decide if a fixed mortgage or an adjustable mortgage is right for you.

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