Interest rates on Fixed Rate Mortgages are still very low!

A fixed-rate mortgage is a type of home loan in which the interest rate remains constant throughout the entire duration of the loan. This means that the borrower will pay the same interest rate on their mortgage from the beginning to the end of the loan term, which is typically 15, 20, or 30 years.


The key advantage of a fixed-rate mortgage is its predictability and stability. Borrowers can budget more effectively as they know exactly how much their monthly mortgage payments will be over the life of the loan. This predictability is particularly beneficial in times of economic uncertainty when interest rates might fluctuate.
Regardless of fluctuations in the broader financial market, such as changes in the benchmark interest rates set by central banks, the interest rate on a fixed-rate mortgage will remain unaffected. This stability provides peace of mind to homeowners who don't have to worry about sudden increases in their mortgage payments.

However, one downside of a fixed-rate mortgage is that the initial interest rate might be higher than the starting rate on an adjustable-rate mortgage (ARM). Additionally, if interest rates decline significantly after securing a fixed-rate mortgage, borrowers will not be able to take advantage of the lower rates without refinancing their loan, which can incur costs and paperwork.

1. You apply for a fixed-rate mortgage through a lender.
2. The lender will assess your credit score, debt-to-income ratio, and other financial information to determine if you are eligible for a fixed-rate mortgage.
3. If you are approved for a fixed-rate mortgage, the lender will issue you a loan commitment. This document outlines the terms of your loan, such as the interest rate, down payment, and monthly mortgage payment.
4. You will then find a home to purchase. The home must meet the lender's underwriting standards.
5. The lender will order an appraisal of the home. The appraisal will determine the home's fair market value.
6. If the appraisal comes in at or above the purchase price, you will be able to close on the loan.
7. You will be required to make a down payment of at least 5% of the purchase price.
8. You will also be required to pay mortgage insurance premiums (MIP), if your down payment is less than 20%.
9. Your monthly mortgage payment will consist of principal, interest, and MIP.
10. You will continue to make your monthly mortgage payments for the entire term of the loan, which is typically 15 or 30 years

Fixed-rate mortgages offer a number of advantages, including:

・Predictable monthly payments: Your monthly mortgage payment will remain the same for the entire term of the loan, regardless of how interest rates change. This can give you peace of mind and make budgeting easier.
・Lower interest rates: Fixed-rate mortgages typically have lower interest rates than adjustable-rate mortgages (ARMs). This means that you will pay less interest over the life of the loan.
・No prepayment penalty: You can pay off your fixed-rate mortgage early without having to pay a prepayment penalty. This can save you money on interest.

However, fixed-rate mortgages also have some disadvantages, including:

・Higher upfront costs: Fixed-rate mortgages typically have higher upfront costs than ARMs. This is because you are required to pay mortgage insurance premiums (MIP), if your down payment is less than 20%.
・Longer term: Fixed-rate mortgages typically have longer terms than ARMs. This means that you will be making monthly payments for a longer period of time.
・Risk of rising interest rates: If interest rates rise after you lock in your interest rate, you could end up paying more than you expected for your mortgage.

The 15-year mortgage

You will pay less in interest. If you borrow $100,000 to purchase a home at a 4% interest rate, paying over a longer period of time will mean more interest on the money borrowed. So, a 15-year mortgage can significantly cut down on the interest that you pay. Add to that the lower interest rates that are often available for 15-year mortgages and you could have some big savings available.

Your monthly payment will likely be higher. Even with the lower interest rate, you will probably have a slightly higher payment with a 15-year mortgage. This happens because you are paying more towards principal from the beginning. But, you will be mortgage-free in half the time, which is no small feat.

The 30-year mortgage

You will pay more in interest. Longer mortgage means more interest charged. This is how banks and other lenders make their money. They loan you, the borrower, money and collect their interest over the 15 or 30 years it takes you to pay them back.
Your monthly payment will likely be lower. Because you are spreading out your payments over a longer period of time, they will almost always be lower with a 30-year mortgage. If your monthly budget is tight, this may be a better way to go.

How it works

・Monthly payments are based on interest rate, principal loan amount, and amortized interest over 30 years. With a Fixed Rate Mortgage, your interest rate will never change, even if market rates increase!

・Your payment will not change throughout the life of the loan.

・Your actual payment will vary based on your situation and the current interest rates when you apply.

・Pay your mortgage off at any time without pre-payment penalties.



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