QandAs: Loans

What is the most common type of Fixed Rate Mortgage?

Answer:
If you’re planning to buy a new home, there are

several loan options available to you. Some mortgage loans are risky and result in higher future payments. Although chancy, many buyers choose these options because they offer an initial low rate and affordable payments.

However, if you’re looking for a mortgage loan with few surprises, a fixed rate home loan is the right choice.

There are many types of fixed rate mortgage loans. Some offer an initial fixed rate, and then adjust every year after the first three, five, or seven years. However, the most common type of fixed rate mortgage is the one that offers the same rate throughout the entire loan.

With a fixed rate home loan, borrowers can choose from several terms. If you’re looking for a way to pay off the loan balance early, a 10, 15, or 20-year term may be the answer. You’ll pay a higher monthly payment, but less interest.

The majority of fixed rate home loans have 30-year terms. These loans are the most affordable, and they make is possible for individuals with modest incomes to afford a decent home. Moreover, some lenders have begun to offer extended 40-year terms, which offers additional monthly savings.


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