Fixed rate mortgages are becoming more popular, especially in today’s mortgage markets. Why? Well mortgage rates have continued to stay low for an extended period of time, and like any normal economic cycle, “what goes down, must go up.” Bottom line, a fixed mortgage rate can protect you from this rising mortgage rate environment.
Listed below are 5 specific reasons why you might want to consider a fixed-rate mortgage:
1. Lower Mortgage Payment. If you think that you can lower your monthly mortgage payment, why wouldn’t you? Fixed rate mortgages rarely are lower than adjustable rate mortgages. However, if you financed your mortgage when rates were much higher, even a fixed rate mortgage could give you a lower monthly payment. And lock in that low mortgage rate.
2. Adjustable Rate Mortgage, Refinance it. More often than not, this is the scenario that brings homeowners looking for a fixed-rate mortgage. If you have an adjustable rate mortgage and it is about to adjust upward, it may be time to refinance before a payment shock.
3. Refinance a Negative Amortization Mortgage. Like an adjustable rate mortgage, a negative amortization mortgage loan can cause large changes in future mortgage payment.
If you have a negative amortization loan (sometimes called a pick-a-pay loan) then you probably want to refinance into another mortgage before your “repayment period” kicks in. You have been adding principle (and maybe interest) to the “back-end” (later payments or balloon payment) of this loan.
If you have one of these mortgages you definitely want to check into refinancing into a more stable loan. A fixed-rate mortgage is probably the best option.
4. Lock in a Lower Rate. In times of low interest rates this really is a must. Especially if you have seen mortgage rates reach extended, historical lows then you are best advised to lock-in low, before the rise.
5. Have a Stable Mortgage Payment. Like locking in a low mortgage rate, locking in a predictable mortgage payment could be a real need. If you are in a job that has little opportunity for advancement, pay increase, or just flattened out by a bad economy; a stable mortgage payment can be a necessity. Stable mortgage payments are also very important for seniors that are about to enter a period of fixed income.
What homeowners don’t like stability and predictability in their monthly mortgage payment? Getting a fixed rate mortgage can take a lot of stress out of your life and financial situation.
