What Are The Pros & Cons Of A Fixed Rate Mortgage?
One of the most widely known advantages of a fixed rate loan is its predictability. Many borrowers perceive fixed rate mortgage loans as safe because there is less risk compared to an adjustable or variable rate loan. Fixed rate mortgages are available in a variety of terms, such as 15-year, 2-year and 30-year. If a borrower plans to live in their new home for at least 10 years, a fixed rate loan may be the best fit for their financial goals.
Although a fixed rate mortgage is often attractive to prospective homebuyers because of its certainty and stability, typically the interest rate for a fixed rate mortgage loan is higher compared to the interest rate of an adjustable rate mortgage loan. Also, because of the amortization of a fixed rate loan, a homeowner will likely pay off their loan’s principal at a slower rate compared to an adjustable rate loan.