The Advantages of the Fixed-rate Loan

by Kelly Richardson
Loan Page Columnist

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If you're in the market for your first mortgage, you'll be bombarded with offers for different types of new home loans. But if you want a steady loan with no surprises, you should check out the fixed-rate loan.

The real estate market has gone through some marked changes in the past twenty or so years. But one thing that has remained popular and reliable is the fixed-rate loan. The fixed-rate loan has a long history in the mortgage market and continues to provide mortgage buyers with attractive benefits that can't be ignored.

The Fixed Rate New Home Loan

Here are some characteristics of a fixed-rate loan, and why it should be at the top of your list when you go speak with lenders.
  • » Steady Interest Rate: Perhaps the most popular feature of a fixed-rate loan is the fact that the payments remain steady throughout the life of the loan. Property taxes and insurance is the only thing that varies.
  • » Mortgage Length: The traditional fixed-rate loan can be set to be repaid in 15, 20, or 30 years. A biweekly mortgage can be repaid even faster than these other options.

Fixed-rate Loan Extras

If you're wondering how a fixed-rate loan works, we've got the answers. Here's what you can expect from a fixed-rate loan:
  • » Amortization: During the amortization period, most of your monthly payment will go toward interest that accumulates.
  • » Principal: As you reduce the amount on your mortgage, more and more of your payment will go towards the loan principal.
  • » Typical Numbers: A typical 30-year fixed-rate mortgage takes between 22 and 23 years to pay off half of.

Ask your mortgage professional about the advantages of a fixed-rate loan.

About the Author
Kelly Richardson holds a bachelor degree in English and master degree in education from Georgia State University. His articles appear in a variety of respected educational journals, periodicals, and e-zines.

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