The Benefits of a Fixed-Rate Mortgage

What exactly are the benefits of a fixed-rate mortgage?

Should you consider refinancing and getting out of your adjustable-rate loan while the getting is still good?

It all depends on the circumstances. Different types of mortgages are appropriate for different people and situations. However, in most cases, the typical U.S. homeowner finds a fixed-rate loan to be safer and less dependent on market conditions.

An adjustable-rate mortgage could work for you if you understand the terms and conditions, and plan appropriately. But as you begin the process of finding the best home loan option, here are three advantages of fixed-rate mortgages to consider:

1. Inflation protection. Interest rates may rise, but with a fixed-rate loan, your costs won’t be significantly affected. The mortgage rates you pay are not going to soar even if your taxes and insurance costs do. The basic home loan payment (principal and interest) stays the same, which is optimal if you are planning to own your home for five years or more.
2. Long-term planning. It’s extraordinarily helpful to know your monthly housing expenses for the entire term of your mortgage. This can help you plan for other expenses, including property taxes and insurance, and set financial goals for yourself and your family in the future.
3. Much lower risk. Your monthly mortgage payment will be the same, regardless of what current interest rates are, and that’s an element of security many homeowners need. This is why fixed-rate mortgages are popular particularly with first-time home buyers.