What's a fixed-rate home loan? This loan type does just what it says: it keeps the interest rate fixed throughout the life of the loan. The principal and interest on your loan payment also doesn’t change.
If you plan to own your home for a long time, or if you just like the comfort of knowing that the principal and interest on your loan payment won’t change, a fixed-rate loan might be the way to go.
While this loan type is a great option, see how the pros and cons stack up.
The interest rate is the cost of borrowing the principle loan amount. It’s determined by current rates and the borrower’s credit profile (including credit score).
If you have a steady income, the opportunity to buy while interest rates are low and do not want the risk of them increasing, or a plan for long-term residency in your home, a fixed-rate home loan may be a great option.
Due to cost factors, a fixed-rate mortgage is better suited for long-term homeowners. An adjustable-rate mortgage may be a better option if a homebuyer wants to finance short-term.
Your monthly mortgage payment is determined by your credit score, loan amount, loan term, and interest rate.