What’s a Fixed Home Loan Rate?
It’d sure be nice if every homeowner came equipped with knowledge of the different kinds of home loan rates available. The reality is that we could all use a solid brushing up on our knowledge, and especially when it comes to those clutch fixed home loan rates. You don’t want to end up choosing the wrong kind of home loan rate for your current financial situation. That’ll only end up bringing you all kinds of stress further on down the road. So, let’s take a closer look at what exactly a fixed home loan rate is.
What’s a fixed home loan rate?
Let’s start with the basics here. A fixed home loan rate charges a homeowner a set rate of interest that doesn’t change throughout the life of the loan. With that being said, the loan amount of principal and the interest payments every month might organically fluctuate, but the total payment will always be the same. This makes the fixed-rate loan a good idea for all the homeowners who are proactively working on sticking to a tight budget.
What’s the main advantage of a fixed-rate loan?
Now that you have a solid sense of what exactly a fixed home loan rate is, it’s totally natural to understand why the fixed home loan rate is potentially better than an adjustable home loan rate. The biggest selling point of a fixed home loan rate is that it effectively shields the borrower from any drastic increases in monthly mortgage rates on the off chance that the interest rates climb. As a quick side note here, even though the interest rate on the home loan might be fixed, the total amount of interest that you’ll end up paying depends largely on the actual mortgage term. Most lending establishments will offer folks fixed-rate mortgages for a wide range of terms. The most common of these terms are 30, 20, and 15 years.
What’s the most popular term for a fixed home loan rate?
The 30-year fixed home loan rate is the most commonly chosen of the whole bunch. It’s useful even if you don’t have excellent credit for the credit approval process. This is because the 30-year home loan rate offers the lowest monthly payment option. The catch here with that lower payment option is that the maximum amount ends up being much higher because you’re paying much more interest over a longer period of time. On the flip side, the shorter-term home loan rates are higher so that the principal is then paid off in a shorter amount of time.
We’ve touched on some of the crucial cornerstones of information regarding having a firm understanding of what a fixed home loan rate is. Outside of the knowledge you can take from this and store it in your back pocket, it’s also important for you to take the time to assess the state of your financials critically. You’ll likely want to hold off on bringing a fixed home loan rate into your life if your savings have taken a hit or the economy is in bad health due to some ongoing catastrophe like the Coronavirus. The best time to push forward with a fixed home loan rate is when you know the economy’s in a stable place and that you’ll be able to afford the unpredictable yet drastic mood swings of those interest rates.
Once you’ve got your fixed home loan rate situation all sorted, you’ll be well on your way to your next exciting project, like looking into how to winterize your home. It’s wild. The winter really crept up out of nowhere. Every responsible homeowner would be well advised to get their house in proper form to weather the onslaught of formidable winter storms.