Mortgages > What is a Fixed Rate Mortgage?

What is a Fixed Rate Mortgage?

As the term implies, with a fixed rate mortgage the mortgage rate is fixed for a set period of time, so no matter what movements occur in the lender's standard variable mortgage rate, the borrower's arrangement is fixed and, therefore, so are the monthly fixed rate mortgage payments. A fixed rate mortgage would suit someone who likes to know where they stand. A fixed rate mortgage, as suggested by the name, is a mortgage where equal repayments are made every month.Fixed rate mortgages allow you to easily manage and plan your monthly expenditure - because the payment will be the same every month and you won't be affected by any rises in the base rate. If the interest rates rise above the fixed rate on your mortgage, you will see the real benefits of the fixed rate mortgage. A fixed rate mortgage makes it easy to plan ahead, because as the name suggests, the interest rate on your mortgage stays fixed.

This means that as a fixed rate mortgage customer, even if the Bank of England Base Rate changes, the interest rate on your mortgage remains constant over a fixed period of time. This makes your budgeting easier, because you can plan ahead knowing exactly how much your monthly repayments will be. The fixed rate period can be anything between six months and five years, but it's always best to refer to a financial services professional before deciding what period of fixed interest rate to choose. The biggest advantage of a fixed rate is that irrespective of fluctuations in interest rates, your monthly repayments remain the same throughout the period of the fixed rate - usually six months to five years.A fixed rate mortgage is suitable if your mortgage repayments take up a large proportion of your income as it protects you from rises in interest rates. However, you would not benefit from any reduction in the lenders standard variable rate.

Fixed rate mortgages generally incur a penalty if redeemed within the fixed rate period. The advantage of a fixed rate mortgage is that you know exactly how much your mortgage will cost, and for how long. If interest rates on your mortgage rise, well the fixed rate will not. Conversely, however, when mortgage rates drop, your fixed rate mortgage will not drop with them. The key benefit of a fixed rate mortgage is that you are able to accurately budget your repayments for a set period of time.

In addition, fixed rate mortgages are an excellent option, if it becomes apparent that interest rates may be rising over the coming years, as you can protect your mortgage repayments against rises by choosing a fixed rate mortgage. You may freely reprint this article provided the author's biography remains intact:.

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.

2nd Mortgage - Better Than Refinancing

You have probably received refinancing offers in the mail or advertised online touting your ability to pull out your home's equity. But a 2nd mortgage, also called an equity loan, may be a better financing option than refinancing your mortgage. 2nd mortgages are ideal when you just want to tap into your equity, plan to move soon, or are unsure about the amount you want to borrow.Tapping Your EquityTapping into your home's equity is best done through a 2nd mortgage if you already have a low interest loan. Typically, applying for a 2nd mortgage requires fewer fees than refinancing a mortgage. 2nd mortgages are also paid back sooner, so your interest payments are less.Short-Term LoanWith the costs involved in refinancing, you typically need to keep the loan for about two years to break even.

However, with a 2nd mortgage you don't have those fees to worry about recovering. 2nd mortgages do have minimum balance and early pay off fees, but they are significantly less than refinancing...

2nd Mortgage - Better Than Refinancing
Mortgages > 2nd Mortgage - Better Than Refinancing

HELOCs and Second Mortgages: Which One Should I Choose?

Whether you need some extra cash to pay off some credit card debts, or to make some home improvements, home equity lines of credit or second mortgages can be great ways to get started.


Many people looking to borrow money often opt for home equity line of credit, or HELOCs, for short.
They are a tempting first choice, because they can often give you the much needed cash at a low interest rate.
Another advantage to taking out an HELOC, or a home equity line of credit, is that they may provide the borrower with a certain tax break, but you would need to verify this with your lender or accountant.

One drawback to HELOCs, however, is the fact that borrowers are expected to put their homes up as collateral.
So, it is important that you think this decision through, before finalizing the loan, because you may be at risk of losing your home- and its equity- if you are late or cannot make your monthly payments.

Finally...

HELOCs and Second Mortgages: Which One Should I Choose?
Mortgages > HELOCs and Second Mortgages: Which One Should I Choose?

The True Cost of your Credit

The current house price boom has perhaps passed its peak as I write this, but that doesn't stop the mortgage companies from offering yet more new and tempting products that look like good deals for a consumer. But be warned - The standard mortgage, running over 25 years is set like that for a reason! When you see companies offering '40 year mortgages' or 'low start' mortgages, or perhaps even 'interest only' mortgages, you should understand these shiny new products may have a nasty sting ion their credit tail!Perhaps the ultimate expression of lending absurdity is Japan, where at the peak of their last boom, 'Grandfather - Father - Son' mortgages were common. These committed unborn future generations to mortgage payments incurred by their predecessors (a situation thankfully illegal in most parts of the world!). Could it ever happen here? Probably not, but the extension of 'standard' mortgage terms on lower interest rates are not actually a good thing for the ordinary Joe, even though...

The True Cost of your Credit
Mortgages > The True Cost of your Credit

New Hotline 800-403-3848 For Homeowners Looking to Take Out a Home Loan, but Have No Income Documentation

Irvine, CA (ContentDesk) April 16, 2006 -- Homeowners with adjustable rate mortgages are facing payment shocks as rates on their mortgages are due to adjust. Borrowers that have no income documentation are especially at risk of not being able to refinance their adjustable rate mortgages. Express Capital Funding Group now offers no cost initial consultations to borrowers that face their monthly mortgage payments going up due to higher interest rates. There are several reduced payment mortgage programs available to borrowers with no income documentation. Some of the programs include 40-year fixed, Interest Only, and 10-year fixed rate loans.

Express Capital Funding Group is based out of Irvine, California. The company offers a variety of fixed rate mortgage loan programs designed to reduce monthly payments. For more information, please visit www.expfunds.com, or call 800-403-3848..

New Hotline 800-403-3848 For Homeowners Looking to Take Out a Home Loan, but Have No Income Documentation
Mortgages > New Hotline 800-403-3848 For Homeowners Looking to Take Out a Home Loan, but Have No Income Documentation

Atlanta Home Mortgages

When purchasing a new home in Atlanta, a buyer should consider the mortgage interest rate and his own financial capability. Then he should think about the lending period of the home mortgage. Generally in the case of a fixed rate mortgage, where the rate of interest stays the same, the time span ranges between 15 years to 30 years.

If the borrower goes for long-term loan, obviously his interest payment will be higher. However, he can avoid that without reducing the initial size of the mortgage through higher monthly payments of the principle amount. But higher monthly installments reduce the flexibility of the borrower.

To avoid this he may opt to pay one extra monthly payment every year.

The borrower may also choose an adjustable rate home mortgage in which interest rates fluctuate with market interest rates. The interest rates of such mortgages will be lower when compared to those of fixed rate mortgages. In such a mortgage, the borrower pays lower...

Atlanta Home Mortgages
Mortgages > Atlanta Home Mortgages

Change in Texas Law May Make Reverse Mortgages More Popular

Texas was one of the last states to allow homeowners to take out home equity loans. Laws going back to the nineteenth century strictly prohibited home equity lending, as legislators feared that unscrupulous lenders would take advantage of homeowners for the purpose of seizing their homes through foreclosure. This made it impossible for citizens of the Lone Star State to use their equity for home improvements, debt consolidation or paying medical bills, as homeowners in other states may do.In 1997, the Texas constitution was amended to allow homeowners to borrow against their home equity. The amendment allowed for traditional term loans, lines of credit, and reverse mortgages, but did not allow a line of credit on a reverse mortgage. In a reverse mortgage, owners of homes who are at least 62 years of age may borrow against the equity in their home.

They need not pay the money back until they die, move or sell the home. Reverse mortgages have become quite popular in the last few...

Change in Texas Law May Make Reverse Mortgages More Popular
Mortgages > Change in Texas Law May Make Reverse Mortgages More Popular

Are you ready for a 40-year mortgage?

Real estate prices have been increasing steadily over the last five years, particularly on the East and West coasts. In parts of California, homes are selling for 33% more than they were a year ago. This has made it more difficult than ever for first-time homebuyers to purchase a home. Over the years, a number of new mortgage options have become available to prospective buyers that ease the burden of buying a home. Buyers can now obtain a mortgage with a variable interest rate that rises or falls with the market or even a mortgage that requires only interest payments for the first few years of the loan term.

This allows buyers to make smaller payments early in the repayment schedule while purchasing a more expensive home than they otherwise might be able to afford. The payments would increase in later years, but so, presumably, would the income of the buyers, so that the home would still be within the buyers' range of affordability. A relatively new mortgage option that may soon...

Are you ready for a 40-year mortgage?
Mortgages > Are you ready for a 40-year mortgage?

Home Loans -- The Hot New Product? The 30-year Mortgage

In recent years, the mortgage industry has introduced dozens of new types of loans. The needs of every borrower are different, so the mortgage companies have tried to come up with an answer for every problem. They've introduced 40-year mortgages, promoted 15-year mortgages, and introduced the wildest array of variable-rate mortgages imaginable. There are mortgages that have interest rates that adjust every few months, every few years, or just once. A recently popular product that thrives on the East and West coasts is the interest-only mortgage, which reduces payments by not requiring payment on the loan's principal for the first few years of the loan.

The prospective homebuyer could have as many as one hundred possible types of loans to choose from when searching for a mortgage. Amidst this huge array of loan types, one type is growing in popularity faster than all the rest, and it may surprise you. The fastest-growing type of mortgage in America right now is the traditional...

Home Loans -- The Hot New Product? The 30-year Mortgage
Mortgages > Home Loans -- The Hot New Product? The 30-year Mortgage