Information On Fixed Rate Mortgages
July 16, 2008
For many individuals, whether first time buyers or not, the prime thought when looking at a fixed rate mortgage is the monthly repayment cost. Currently, many of us are waiting until later in life to purchase a home but still want to have the house settled as soon as possible. But, before you commit yourself and sign any documents, there are a number of points you should consider.
An essential thought to remember is that you wish to make sure that the interest rate doesn’t alter during the course of the loan. Of course, many lenders seem to offer deals that are too good to be true. Loans arranged for a long term fixed rate mortgage keep the same rate of interest throughout the entire life of the loan agreement. This has apparent benefits, especially for anyone who doesn’t like surprises especially those associated with variable monthly mortgage payments. When we were looking to buy a home, my wife and I decided to go for a loan with a fixed rate mortgage. Our aim was to pay of the mortgage as soon as we could without getting into financial trouble because of high monthly installments.
In addition to looking at loans for a long run, 15 year fixed mortgage rate we also looked into loans that spanned 30 years as well. We didn’t really like the idea of having a mortgage as we drew close to the age of retiring so we were really hoping to get one of the loans with a shorter 15 year fixed rate mortgage. There was obviously very good grounds to finish paying the mortgage off earlier if at all possible. After discovering out my wife was having a baby, reaching the decision we did was the only one that made long run sense. Because my wife desired to raise our child at home we couldn’t be certain of her monthly fiscal contribution to our household expenditure. The problem we could see was the raised fiscal commitment with a higher monthly repayment if we had opted for the shorter 15 year fixed rate mortgage. For us it just wasn’t feasible as we would just be in over our heads and probably be worrying about money every month.
As such the thirty year fixed mortgage rate brought the monthly installments down quite a bit. Also, where possible, making a few additional lump sum payments during the year helps bring down the amount owed. Just by making a handful of supplemental installments throughout a twelve month period you can knock years off of your loan period. Although this isn’t easy to achieve, in the long run it is well worth it. Although we would have much preferred the mortgage for a 15 fixed mortgage rate we had to take our needs and fiscal abilities into consideration. But in retrospect, everything worked out ok for us in the long run.
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