When it comes to mortgage interest rates, you have two basic choices, adjustable and fixed. There are several good reasons for choosing a fixed interest rate when mortgage refinancing. Here are several tips to help you decide if a fixed interest rate mortgage is right for you.
When the current fixed mortgage rates are low compared to the previous two or three years, fixed rate mortgages are a good idea. Choosing a fixed rate mortgage locks in your payment amount and interest rate for the remaining term of the loan. Mortgage interest rates change frequently and over the last quarter century mortgage rates have been as high as 19 percent and as low as 5 percent. If you lock in your mortgage rate too high you’ll spend more for your mortgage unnecessarily. When interest rates are historically low is the best time to lock in your mortgage rate.
Fixed interest rate mortgages are ideal for homeowners that want to avoid the risks associated with Adjustable Rate Mortgage loans. If you’re not the gambling type, fixed rate mortgages never go up. While Adjustable Rate Mortgages start out low, they can go up quickly when your lender adjusts your loan. If you want to know what your payment will be ten, fifteen, or twenty years from now, choosing a fixed rate mortgage could give you peace of mind.
You can learn more about your mortgage options, including costly mistakes to avoid with your mortgage interest rate by registering for a free mortgage tutorial.