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Fixed
Rate Mortgage
Even
with the increase in the popularity of more exotic mortgage programs,
the Fixed
Rate Mortgage (FRM) remains the most common mortgage
program in use today.
Fixed Rate Mortgages are best suited for homeowners
who plan on remaining in the property (or in the loan) for an
extended period of time. These mortgages also are a great fit
for those who do not wish to deal with the potential payment increases
that can come with an adjustable
rate mortgage (ARM). The interest rate on a fixed rate mortgage
will typically be slightly higher than that of an adjustable rate
mortgage.
Today, hybrid
mortgages offer a compromise between the stability of a fixed
rate mortgage and the lower interest rates of adjustable rate
mortgages. A hybrid loan offers a fixed rate (typically fixed
for 3, 5, 7 or 10 years) followed by an adjustable rate for the
remainder of the loan term. As a rule of thumb, the longer the
term of the fixed rate period, the higher the interest rate.
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