For any ordinary man, who is thinking of buying any kind of residential or commercial property, acquiring mortgage loans, is the most important source for obtaining finance. For those acquiring mortgage loans, the most important decision that they have to make is the type of mortgage loan they should go for.
Mortgage loans are categorized on the basis of rate of interest and actually there are two types of mortgage loans, namely fixed rate mortgage and adjustable rate mortgage (ARM). As the name suggests, fixed rate mortgage actually means mortgage where the rate of interest remains unchanged throughout the loan period. As such there are two types of fixed rates mortgages namely 30 year Fixed rate mortgage and 15 year fixed rate mortgage. The basic difference between the two is the time period.
In case of the former one, the borrower pays off the loans in 30 yrs, while in the latter loan is paid off in 15 yrs. Borrowers going in for a 30 yrs fixed rate mortgage have to pay lower monthly payments can compared to 15 yr fixed rate mortgage, however, the rate of interest is higher as compared to the latter. On the other hand those going in for 15 yr fixed rate mortgage though have a lower rate of interest compared to 30 year fixed rate mortgage, their monthly payment is comparatively higher. Thus both types of fixed rate mortgages have their own set of advantages and disadvantages and what to choose entirely depends upon the borrower’s requirement.
Apart from these two types of fixed rate mortgages, biweekly mortgage is also available in the category of fixed rate mortgages. In case of the biweekly mortgage, the term of the loan is for about 18 to 19 years. However, in this type of mortgage, the borrower has to pay half of monthly mortgage payment after every two weeks, instead of making payment amount once in a month. This allows borrowers to pay off their loans at a faster rate and that too at a lower interest cost.
The fixed rate of mortgage is in fact one of the popular and classic form of loan especially in USA. Many people prefer fixed rate mortgages because as compared to adjustable rate mortgages it offers more security to borrowers, due to its unchanged rate of interest. Moreover it is easy to understand and is also best suited for those people who wish to keep their property for a longer time period. However, as the lender offering fixed rate mortgages faces a higher risk, the rate of interest is much higher compared to adjustable rate mortgages. Moreover, the initial monthly payment in this case is also comparatively much higher.
Thus fixed rate mortgage has its own set of advantages and disadvantages. However, for those borrowers who want to go for fixed rate mortgages choosing the right lender to acquire these loans is very essential, otherwise one might end up paying higher fees and excessive interest rate. In this respect borrowers can take advantage of the mortgage program provided by www.foreclosure1.com. As this website enables prospective buyers to find the best rate at the best possible terms from the right lender.
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