By Jason M White
"Fixed rate home mortgages" is a term most people hear quite often in television commercials, newspapers, and on the radio. What does this term actually mean? Basically, a mortgage means that instead of shelling out a big lump sum of cash to buy a home outright, you are using your property as collateral until your debt is paid off.
The property you are using as collateral isn't technically yours yet but it is paid for by your lender. One of the most common mortgage types is the fixed rate loan.
Fixed rate mortgages are home loans that are set over a certain period of time just like any other type of loan. What makes this loan different is that you are guaranteed one interest rate for the duration of your loan.
This is the most popular type of mortgage because it is very stable and you always know what you will be paying each month. Fixed rate home mortgages typically come in 15, 20 and 30 year varieties but in many areas where the cost of housing has skyrocketed, you may be able to get a 40 or 50 year fixed rate home mortgage.
Almost all fixed rate home mortgages will let you pay on the principal early without charging you penalties. This can reduce your monthly payments even more or allow you to pay the loan off early.
Interest rates can change dramatically in a short time and many people suffer the risk of foreclosure when the interest rates up their monthly payments to something out of their budget. You don't have to worry about that with a fixed rate home mortgage. This peace of mind is what makes this mortgage loan so appealing.
This mortgages are preferred by people who have steady jobs and wish to own their own home. Odds are as years pass, you will get a promotion or two and since your mortgage payments won't increase, you will have quite a bit of extra spending money each month you can use to improve your property or even buy another home.
Interest rates fluctuate often so before you commit to a mortgage loan, it is a great idea to consult a real estate agent who can give you some tips. Good real estate agents know what areas are going to be right for you as well as bills that might be passing soon and other factors that should be considered before purchasing real estate.
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