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.

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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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