A fixed-rate mortgage is often described as a "traditional" mortgage, as it was the first type available to American homebuyers. Initially these mortgages required high down payments. For example, mortgages in the early 1900s often featured five-year terms and required a 50% down payment! Thankfully, today's fixed-rate loans offer much more flexibility, with terms up to 30 years and low down payment options.
The main feature of a fixed-rate loan is that your interest rate will not change during the life of your loan. This means that your monthly payments (principal and interest) will always be the same. This may be your best choice if you want to keep your monthly budgeting simple. Keep in mind that your home's taxes and insurance premiums may change over the years, which can affect the total cost of home ownership.
Fixed-rate loans are usually your best choice when interest rates are low and you plan to stay in your home for at least five years.
Pinnacle Mortgage Bankers offers a variety of fixed-rate mortgage options. They include:
- Low down payment programs: These are often ideal for first-time buyers, including people who have not yet saved a large down payment or prefer to keep the majority of their savings intact. Low down payment programs give more people the freedom to enjoy the advantages of home ownership sooner. These include the opportunity to begin building equity -- the amount of your mortgage you've repaid, plus any increase in your home's value -- sooner.
- Balloon loans: If you already know you'll need to sell your home within the next few years, or want to start out with lower interest rates and lower monthly payments, a balloon loan could be a smart choice.
- Government programs: Insured by the FHA (Federal Housing Administration) and VA (Veteran's Administration), these loans are popular choices for borrowers who are looking for a lower down payment option. Veterans and active servicemen and women who qualify for VA financing can often enjoy lower interest rates and fees, plus low down payments, by using their VA loan entitlement.
