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your guide to

Fixed-Rate Mortgage

A reliable home loan where the interest rate remains constant throughout the entire loan term.

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Embarking on the journey of homeownership often involves navigating through various mortgage options. One steadfast choice that has stood the test of time is the Fixed-Rate Mortgage (FRM). In this comprehensive guide, we'll delve into the intricacies of Fixed-Rate Mortgages, exploring the different types available, specific details about each type, eligibility criteria, and the unparalleled advantages they offer to prospective homebuyers.

Understanding Fixed-Rate Mortgages:

A Fixed-Rate Mortgage is a reliable home loan where the interest rate remains constant throughout the entire loan term, providing predictability and stability for homeowners. Let's explore the specific types of Fixed-Rate Mortgages available in the market.

Types of Fixed-Rate Mortgages:
1. 30-Year Fixed-Rate Mortgage (30-Year FRM):

Ideal for those seeking lower monthly payments and extended repayment terms. A popular choice for first-time homebuyers or those seeking financial flexibility.

Interest Rate: Competitive and stable.

Down Payment Options: As low as 3% to 5%.

Fast Close: Typically within 14 to 21 days from contract to keys.

Eligibility Criteria:

Minimum 3% down payment for low-balance loan amounts.

Minimum 5% down payment for high-balance loan amounts.

Minimum credit score of 620.

Loan amount within the property’s county conforming loan limits.

2. 15-Year Fixed-Rate Mortgage (15-Year FRM):

Suited for individuals aiming to pay off their mortgage rapidly and save on interest. Preferred by homeowners looking to build equity swiftly.

Interest Rate: Generally lower than 30-Year FRM.

Monthly Payments: Higher due to shorter repayment period.

Eligibility Criteria:

Suitable for those aiming for faster mortgage payoff.

Ideal for building equity quickly.

Requires higher monthly payments.

Benefits of Fixed-Rate Mortgages:
  1. Rate Stability: Monthly payments remain constant, providing financial predictability.

  2. Long-Term Budgeting: Easier to plan for the future with consistent payments.

  3. Protection Against Interest Rate Fluctuations: Shielded from market fluctuations as the interest rate is locked in at the outset.

Eligibility Criteria for Fixed-Rate Mortgages:
  1. Stable Income: Demonstrating a consistent and reliable source of income.

  2. Good Credit Score: A minimum credit score of 620 is typically required.

  3. Debt-to-Income Ratio: Maintaining a reasonable debt-to-income ratio.

  4. Down Payment: Specific percentages vary based on loan types (e.g., 3% for low-balance loans, 5% for high-balance loans).

5.327% / 6.459%
30 Yr Fixed
Rate / APR
5.327% / 6.459%
30 Yr Fixed
Rate / APR
Comparing 30-Year and 15-Year Fixed-Rate Mortgages:

While a 15-year option accrues less overall interest, the 30-year option provides lower monthly payments, offering more liquidity and flexibility. Additional payments can be made to reduce the principal balance at any time.

Interest Rates for Fixed-Rate Mortgages:

Fixed-rate loans, especially 30-year FRMs, offer some of the lowest and most competitive rates. However, other programs like 15-Year FRMs, Adjustable Rate Mortgages (ARMs), and Jumbo Loans may have slightly lower rates due to specific risk considerations.

Advantages of Fixed-Rate Mortgages:
  1. Predictable Monthly Payments: Consistent payments over the loan term provide financial stability.

  2. Equity Growth: Monthly payments contribute to equity accumulation.

  3. Hedge Against Inflation: Fixed payments protect against cost-of-living increases.

Is a 30-Year Fixed-Rate Loan Better than a 15-Year Option?

While a 15-year fixed-rate mortgage accrues less overall interest, the 30-year option offers lower monthly payments, providing more liquidity and flexibility. Buyers can consider investing the savings from the lower monthly payment for potential returns, making the 30-year option an attractive choice.

Differences Between Fixed-Rate and Adjustable-Rate Mortgages (ARMs):

Unlike ARMs, 30-year fixed-rate mortgages offer stability with a constant interest rate. ARMs, on the other hand, have fluctuating rates after an initial fixed period, introducing more uncertainty and risk.

Fixed-Rate Mortgages, with their various types, offer a stable and reliable path to homeownership. Whether opting for the extended term of a 30-year option or the rapid payoff of a 15-year option, the predictability and protection against market fluctuations make Fixed-Rate Mortgages a preferred choice for many. Consult with our expert mortgage advisors for personalized guidance on choosing the right Fixed-Rate Mortgage that aligns with your homeownership goals.

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