Here's a quick review of the pros and cons of fixed rate mortgages:
Fixed Rate Home Mortgages
Loan loans with repayment terms of 15, 20, or 30 years. With a "fixed rate" of interest, payments will be predictable as they remain the same for the life of the loan. The shorter loan terms will normally provide lower interest rates.
The advantages of Fixed Rate Mortgages are:
- Interest rates that don't rise
- Payments (for principal and interest) that remain the same
- Protection in the event that market interest rates go up
The disadvantages of Fixed Rate Mortgages are:
- Higher initial interest rate than adjustable rate loans.
- Overall higher interest costs over the life of a loan should market interest rates decline.
The Bottom Line: Fixed Rates Loans are generally more desirable when low interest rates can be "locked in" ahead of likely market interest rate increases. Fixed Rate loans offer the greatest benefits for borrowers who lock in low rates AND plan to remain in their home for a long period of time. as variable rate loans