Fixed Rate Loans

What Are Fixed Rate Loans?

Fixed rate loans are a type of mortgage with an interest rate that remains static for the entirety of the loan duration. Meaning that your total monthly payments – principal and interest – will be the same over time.

Fixed rate loans are the preferred type of home financing out there, providing homebuyers with a stable and predictable payment structure to budget around. On the other hand, they do tend to have higher interest rates than their counterparts, adjustable-rate mortgages (ARM). Fixed rate mortgages usually come in terms of 15 and 30 years. Longer-term ones have lower monthly payments, but you end up paying more total interest over its life. They also come with higher interest rates.Shorter term loans have you paying less interest overall and tend to have lower rates too. They do however, come with higher monthly payments.

It’s also important to know that while your rates are fixed, your mortgage payments can vary if your property taxes or homeowner’s insurance rates change.

Already have a Fixed-rate loan on your sights? Use our mortgage calculator and make sure it’s the right one for you!

Fixed Rate Loans – Notable Requirements

Different types of loans vary wildly on their qualification requirements.

While these might not be all the requirements to qualify for a Fixed Rate loan, they are definitely essential to know up front!

• Many of the more accessible fixed rate loans require a down payment of at least 3%
• Fixed rate loans tend to have demanding requirements as far as credit scores, with minimums sitting around 600.
• They require you to commit for a long time, as their most common terms last at least 15 years.
• Even if interest rates lower, you expected to keep paying the initially agreed amount until you refinance.
• Most lenders set the debt-to-income bar at 43% to qualify.
• You need proof of a steady income source capable of sustaining the new debt load to qualify.

Fixed Rate Loans & Accessibility – All You Need to Know:

There’s a good reason why fixed-rate mortgages are so popular. Not only are they ubiquitous – almost every major bank and lending institution offers them – but they also are an excellent way to plan long term.

With a fixed rate mortgage, you have a pretty accurate picture of how your obligations will look years down the road, debt-wise. This takes away a lot of the uncertainty that comes with such a significant financial commitment. That said, the requirements do tend to be higher overall when compared to other types of mortgages. On top of that, you usually don’t get offered competitive rates unless you have a remarkable credit history and financial means.

There’s also the issue of paying off the principal at a lower rate, since your payments over the first few years will go primarily toward interest. If you are planning to sell your house within 5 to 10 years, this might present an issue. All in all, though, fixed rate loans are a great alternative to keep present as you hunt for the ideal mortgage for your financial needs.

Ready to get that Fixed Rate Loan you’ve been looking for? Let us help!