A fixed rate mortgage loan allows homeowners to plan well into the future exactly what the principle and interest portion of their monthly housing expense will be. The payments are not effected by a change in interest rates. Many homeowners desire the security offered with a fixed rate mortgage, even if it means accepting a slightly higher rate.
Are you comparing an adjustable rate with a fixed rate mortgage loan? Contact a Real Estate Lawyer if you have any questions about a fix rate mortgage.
Fixed rate mortgage loan notes:
- Rates will vary from one loan product to another
- Discounts points may be required
- Typically imply higher initial payments compared to an adjustable rate mortgage
- Carefully consider all of your options before deciding on any mortgage program.
All mortgages including a fixed rate mortgage loan are broken down into two sections. The first is called principle, and the second is interest. Just as it sounds, the principle is the actual amount borrowed. The interest is computed on an annual basis, and then charged or collected on a monthly basis. For example a $100,000 loan at 12% would have annual interest payments of $12,000 or $1,000 per month. The actual principle payments are divided over the total amount of years the loan would be financed for.
Are you comparing an adjustable rate with a fixed rate mortgage loan? Contact a Real Estate Lawyer if you have any questions about a fix rate mortgage.
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