TODAY'S RATES: Home Mortgage Refinance & Purchase Rates
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Fixed Rate MortgageA fixed rate mortgage or FRM is a mortgage loan where the interest rate on the note remains the same throughout the term of the loan, as opposed to loans where the interest rate may adjust or "float." The major advantage of a fixed rate mortgage is that it presents predictable housing costs for the life of the loan. Mortgages may be either fixed rate mortgages (FRM) or adjustable rate mortgages (ARM). In the case of fixed rate mortgages, the interest payments remain constant during the whole term of the loan. In adjustable rate mortgages the interest payments change in relation to the bank rate. A fixed rate mortgage guarantees that your interest rate stays the same, which means that your monthly principle and interest payments throughout the entire term of the mortgage remain unchanged. With a fixed rate mortgage, your monthly payments would only increase due to increases in property taxes or insurance rates. A fixed rate mortgage allows you to budget accurately and enjoy lasting peace of mind. Knowing that your mortgage payment will remain the same month after month allows you to plan for life's other pleasures, like vacations, college educations and retirement. It's pretty simple, if you don't like risk, then a fixed rate mortgage is right for you. ARM LoanARM is an acronym for adjustable rate mortgage which is a basic mortgage with one important exception. With an ARM, your interest rate will start lower than fixed rate mortgage generally, but it may move up during the life of the loan. The timing of the movements is dictated by the term of the loan & bank rate fluctuations. The rate may be adjusted every month, but more typical periods are every six or twelve months. Most adjustable rate mortgages also have a cap on the amount the interest rate can be raised in a particular period. | |