About Low Fixed Mortgage Rates
Recent economic issues have forced mortgage rates to decline, therefore buying a home is a very attractive option for those who can take advantage of the low rates. Locking in a fixed rate means that your mortgage payment will not increase for the life of the loan. Almost 75 percent of all home mortgages are fixed interest rate mortgages.
Other People Are Reading
-
History
-
Since 1983, 15-year fixed rate mortgages were highest in July of 1984 (14.75 percent) and lowest in June of 2003 (4.84 percent). Currently, the mortgage industry is backing a plan to lower the 30-year mortgage to 4.5 percent as reported by the Associated Press and MSNBC.com. This is in response to the crisis presently impacting the housing market.
Significance
-
Not everyone can qualify for a low fixed mortgage rate. Consumers who do qualify have strong credit scores and cash for down payments. Homeowners who would like to refinance may also take advantage of low fixed mortgage rates. Having equity in their home helps, but they still need a strong credit score to qualify. The lowest fixed mortgage rates are available to consumers with a credit score of 740 or higher and a 25 percent down payment.
-
Types
-
Most low rate mortgages are for 30 years, but a 15-year fixed mortgage rate is typically lower than one for 20 or 30 years. Borrowers would have to qualify based on their credit score, down payment amount and income requirements. The shorter the loan, the higher the payment, no matter how low your mortgage rates may be.
Considerations
-
Fixed rate mortgages offer higher interest rates than adjustable rate mortgages, or ARMs, as the lenders feel the risk is greater. They are also easier to understand than adjustable rates which are tied to an index rate and move accordingly. Fixed rate mortgages offer less flexibility than ARMs and typically have higher initial monthly payments.
Benefits
-
Having a low fixed mortgage rate enables you to budget your expenses without any surprises from your mortgage company. Fixed mortgages do not increase over time like adjustable rate mortgages. Having a consistent monthly payment offers more security, and fixed rate mortgages are commonly used by first-time home buyers. Obtaining a low fixed rate mortgage is a practical way to buy a home if you can meet the rigid lender requirements.
-
Resources
- Photo Credit refinance.net
