Fixed Mortgages Versus Adjustable Rate Mortgages

Predictable monthly payments is the number one reason people want fixed mortgages.  Who could argue with the security of knowing what your next payment will be.

The number one reason people want a fixed mortgages is that they will know exactly what their mortgage payment will be month after month for the entire time they are paying on the loan. The reason for this is because the interest rate on the loan is fixed for the entire life of the loan making the principal and interest payment to remain the same. THe only reason someones payment on fixed mortgages would change is because of the taxes or the home owners insurance increase.

Reason fixed mortgages are a good choice if you:

Think interest rates could rise in the next few years and want to keep the current rate.
Plan to keep your house many years. Generally speaking if you are going to keep your house more than 5 years its a good rules to go ahead and get a fixed rate mortgage.

If you are a person who doesn't like risk then fixed mortgages are perfect for you. The only other options are adjustable rate mortgages and with these loans you have to live with the uncertanity
.
If you plan on living in the house a few years and then having it become a rental house. This way you will have the lowest interest rate possible for the years you keep your rental property for.

When shopping for fixed rate mortgages you will have many options to choose from.

The most popular choices on fixed home loans is 30 year fixed mortgage, 20 year fixed mortgage and the 15 year fixed mortgage.

There are also 25 and 10 year fixed mortgages.

Interest only mortgages can be fixed and they start out with lower payments because your not having to pay down the principal to start with. You are only paying interest which the name of the loan implies and of course the bad part is your not building any equity except what the house is appreciating.

To get the lowest interest rate on fixed mortgages,

Generally speaking your credit score has to be over 720 to get the lowest rate possible. Plus you have to have verifiable income and have been at your present position. This is easy for the employed but for someone running their own business this can be a hard requirement to hit.

Adjustable rate mortgages can make your payments jump!

Fixed Vs Adjustable Rate Mortgages

 In my honest opnion with interest rates where they are you should go with one of the fixed mortgages.  Fixed mortgages will give you a little security in knowing exactly what your principal and interest payment is going to be month after month.  Nothing beats knowing what your payment is now and what it will be 5 years from now if you don't do anything.