Best Fixed Rate Mortgage

Fixed Rate Appeal

The appeal of a fixed rate mortgage is that the interest rate does not fluctuate throughout the life of the loan. This means that a mortgage starting out at 6% will still be 6% years down the road, as long as you don’t refinance. There is a certain stability that comes with a fixed rate mortgage, because a sudden spike in interest rates does not affect your mortgage loan at all.

Most conservative financial experts agree that a fixed rate mortgage is the preferred loan because it allows the borrower to sign up for payments that are predictable instead of acquiring an adjustable rate mortgage and crossing their fingers that interest rates do not increase substantially throughout the life of the loan.

Caution

A fixed rate does not mean that the total monthly payment amount will never increase. Even the best fixed rate mortgage loan monthly payment is subject to increase if real estate taxes rise or the cost of your homeowner’s insurance increases. Of course, if you pay your own taxes and insurance then an increase will not change the amount of money you send to your mortgage lender monthly, but the majority of homeowners pay their taxes and insurance into an escrow account via their lender.

The Best Fixed Rate Mortgages

There is no one single lender that will consistently offer the very best fixed rate loans for mortgages, but there are certain characteristics you should look for when choosing a lender:

• The lender should offer low interest rates. Although you will probably pay a higher interest rate for a fixed rate loan than an adjustable rate loan, the best lenders offer interest rates on mortgages that are considered low by current industry standards.
• The lender should not have excessive fees and closing costs. The best mortgage lenders offer low interest rates in conjunction with low fees and closing costs. Look for a lender that doesn’t charge application fees, origination fees, or prepayment penalties.
• The lender should have a good reputation. It’s not hard to research a lender’s reputation by using the Internet. Check with the Better Business Bureau or simply type the name of the mortgage lender into a search engine and see if any interesting complaints pop up.
• The lender should offer a pricing or interest rate guarantee. If you deal with a lender who will match or beat any competitor’s loan offer then you’re assured you will get the best loan possible one way or another.

Understand that it isn’t necessarily easy to find the best loan product out there because you have to wade through the various offers from potential lenders. Although many borrowers choose to pay a mortgage broker to find the best possible offer, you can find great offers yourself with a little effort and research.

Tips for Getting the Best Fixed Rate

You cannot hope to obtain the very best mortgage loan – fixed or otherwise – if you do not have an excellent credit score. The better your credit score, the better your interest rate can potentially be. Smart lenders also do not tack unreasonable fees onto fixed mortgage loans for applicants with excellent credit ratings.

You should also expect to make at least a twenty percent down payment on a mortgage loan if you want to avoid extra fees, and having a large sum of money in the bank besides your down payment and closing costs can help you to get approved for an attractive mortgage loan.

Get Started

Check with any lenders who you currently do business with (banks, credit unions, etc.) and take some time to also search for great loans through websites like BankRate.com.