Fixed-rates mortgages are considered to be the “gold standard” of today’s mortgage products in America. It’s no surprise they are the most popular mortgage product used today for both purchases and refinances. A fixed rate mortgage is a fully amortizing mortgage loan, meaning all payments contain both principal and interest portions, where the interest rate remains the same for the entire length of the note, hence the name “Fixed-Rate Mortgage”.
Fixed-Rate Mortgage Benefits
There are many specific benefits borrowers get when choosing a mortgage at a set fixed-rate. One of the greatest benefits is that the monthly payment stays the same for the life of the loan, giving the homeowner the comfort of knowing exactly what their payment will be without any unpleasant surprises. Home loans with fixed mortgage rates don’t fluctuate with the bond market like Adjustable Rate Mortgages.
Fixed-rate mortgages are offered by lenders at various term lengths. The most popular include the 30-year fixed-rate mortgage and the 15-year fixed-rate mortgage. Less popular terms options include 20 year and 10 year term lengths. Some lenders even offer fixed-rate loans that are paid biweekly. Biweekly mortgage payments allow borrowers to cut down on their interest payments each month, resulting in a significantly shortened loan length.
Since the financial crisis of 2008, the going interest rates for fixed rate mortgages have decreased to levels not previously seen. In fact, 30-year fixed mortgage rates were just recently at their all time lowest levels, as were 15-year fixed mortgage rates. Historically, there hasn’t been a better time frame to consider choosing a mortgage with a fixed-rate for a home purchase or refinance.
Fixed-Rate Mortgage Options
Fixed-rate mortgages loans are widely offered by government housing agencies and GSE’s in the U.S. including FHA, VA, USDA, Fannie Mae and Freddie Mac. Popular fixed-rate programs for home buyers and homeowners include the following:
- Conforming Fixed-Rate Mortgage – Offered at various lengths for Purchase and Refinance
- FHA Fixed-Rate Mortgage – Offered at 30 and 15 Years for Purchase and Refinance
- USDA Fixed-Rate Mortgage – Offered at 30 Years for Purchase
- VA Fixed-Rate Mortgage – Offered at 30 and 15 Years for Purchase and Refinance
Other mortgage types that are offered as alternatives to the fixed-rate loan are the adjustable rate mortgage or ARM, interest only mortgage, balloon mortgage, home equity loan and reverse mortgage.