| The fixed rate mortgage has a long history and is | | | | credit buyers in the fixed rate arena. |
| considered the standard of home loan financing | | | | Another disadvantage to the fixed rate mortgage is |
| instruments. Long before the adjustable rate mortgage | | | | that if interest rates in general drop, the fixed rate |
| came along the fixed rate mortgage was being used | | | | borrower may end up paying more than others are |
| and is still being used by many home buyers. There is | | | | paying who are locked in at the lower rate. The only |
| a reason for that loyalty. | | | | real way to adjust a fixed rate mortgage is to |
| One of the major advantages to using a fixed rate | | | | refinance, which can be costly to the home owner. In |
| mortgage is that home buyers know almost to the | | | | some cases, however, a refinance is a very good idea |
| penny what their monthly home payment will be over | | | | and fixed rate buyers should look into it. |
| the course of the loan. This is in stark contrast to how | | | | Fixed rate mortgages are also somewhat limited in |
| adjustable rate loans act. | | | | their scope. What this means is that you may find that |
| Along with the knowledge of what the monthly home | | | | you have fewer options with a fixed rate than you |
| payment will be during the course of the loan, fixed | | | | might have with an adjustable rate mortgage. This |
| rate mortgage borrowers also have more emotional | | | | should not be considered a disadvantage, though, |
| security than those using ARM's. A borrower under an | | | | because there are only so many things that a bank or |
| adjustable rate mortgage may have no idea what the | | | | mortgage lender can do with a fixed rate loan |
| payments for the home will be in future and, in some | | | | program. |
| cases, this can lead to huge problems later on. Some | | | | As mentioned above, a fixed rate mortgage is a well |
| ARM interest increases can be so high that the home | | | | defined and easy to understand method of financing a |
| owner cannot make the payment and may have to | | | | home. Buyers who want to know what their payments |
| go into foreclosure, losing the home and the equity that | | | | will be during the course of the loan should seriously |
| has been built up in the home. Fixed rate borrowers | | | | consider using this type of financing. One only needs to |
| seldom have to face this dilemma. | | | | look at the news from time to time to see how volatile |
| One of the disadvantages to a fixed rate mortgage is | | | | the adjustable rate market can be for home owners. If |
| that it can be somewhat harder to get than an | | | | your credit is fairly good and you plan to stay in the |
| adjustable rate mortgage for some buyers who have | | | | home for a long period of time, a fixed rate mortgage |
| less than excellent credit. This is not always the case, | | | | may be the best deal for you and your family. |
| but, in general, lenders are more apt to work with good | | | | |