Fixed Rate Mortgage in Florida
A fixed rate mortgage or FRM is a mortgage that does not fluctuate during the course of the home loan and sustains the same interest rate. Being able to count on the same payment month after month is very appealing to most and is the way most new buyers want to go. There are benefits to both fixed rate mortgage or FRM and adjustable rate mortgages.
In Florida you will need a mortgage professional that is going to look closely to your financial situation, weigh all your options and tell you exactly which loan is best for you. With the unstable financial world being what it is, a fixed rate mortgage is a very secure loan and with the exception of your escrow account, your loan payments will stay the same for as long as you have it.
Our professional staff of mortgage specialists in Florida can help answer all your questions and enable you to get your worry free loan as painlessly as possible. You need to look no further for a great mortgage and have all your concerns washed away. With our one-on-one help you will be able to purchase the house of your dreams with a mortgage tailored to your financial situation.
The Ever Popular Fixed Rate Mortgage Still Dominates The Market
A fixed rate mortgage is the product of choice for about 95% of today’s mortgage shoppers, according to lending software company Ellie Mae.
Its popularity is no surprise. Homeowners can lock in a low interest rate, around the low 4% range at today’s rates, for up to 30 years. An unchanging rate for that long was not even an option a few generations ago, and still is not for most home buyers living outside of the United States.
The stability of a fixed rate home loan lets buyers purchase with confidence, knowing that their payment will not change. Budgeting becomes very easy. A fixed rate is not the best choice for every homeowner, but for many, it is the only choice.
But even within the realm of fixed rates, there are several choices. Knowing all the options will put you in a better position to choose a certain type and get your best mortgage rate, too.
How Does A Fixed Rate Loan Work?
With a fixed rate loan is one whose interest rate never changes. That means the principal and interest payment never changes, either. Each month, the homeowner pays decreasing amounts of interest and increasing amounts of principal while the payment stays constant.
This process is called “amortization.” Amortization simply means you are paying off some of the balance each month until the loan is completely paid off. When your loan starts out, you pay mostly interest.
Toward the end of your loan, most of your payments go toward principal. This is because interest is due only on what is owed. So, by the end, you owe next to nothing in interest.
Not only are the interest payments lower, they start decreasing more rapidly toward the end of the loan as principal vanishes faster. But, as a homeowner, you do not necessarily know how much principal and interest you are paying each month, and you do not have to. The important part is the unaltered full payment that you can count on, thanks to your fixed rate.
Many Types Of Fixed Mortgages
The most popular form of fixed interest home financing is the 30 year fixed mortgage. This option spreads out the principal repayment over a long period of time, making even very expensive homes affordable on a monthly basis. Other fixed rate options are available in the marketplace, including the popular 15 year fixed rate.
Additional short term options include the 20 year, 10 year, and even 5 year fixed. Some lenders even offer any loan term you would like, such as a 13 year mortgage. No matter what loan term (meaning length of the loan) you choose, they work the same.
The 30 year fixed is very affordable (you buy a quarter-million dollar item for about $1,200 per month). But it is not the “perfect” loan, because the longer you stretch out the payment, the more interest you pay over the life of the loan. And, you can typically get lower rates for short term loans.
For instance, Freddie Mac reports that most lenders typically offer a 15 year fixed loans at a 75 basis-point (0.75%) discount compared to 30 year rates. That means a four percent rate is closer to 3.25% and perhaps even lower for a 10 year product. That is why many homeowners and even new home buyers choose a shorter term for their fixed mortgage.