Fixed rate mortgages are a mortgage loan where the interest rates remain the same for the whole term of the loan. Some other loans do not offer this benefit; there interest rates will change throughout the loan. Some borrowers prefer the fixed interest rate for their loan because they like to have the same payment throughout the loan period. The other loan payments will go up and down throughout their loan term.
Lenders will offer you several different types of mortgages, but the fixed rate mortgages are the most common one chosen. The fixed rate and fixed payment generally are offered for a loan period of fifteen or thirty years. Most people prefer this type of loan because the mortgages are more affordable, and they know what they are going to need each month to pay it back. The other loans do not offer this benefit.
This type of loan has some advantages over the other kinds of loans. They offer you the chance to borrow money for an extended period of time without worrying about interest rates going up. The monthly payments are lower since you have longer to pay back the loan. The interest charged is a little bit higher than other loans, but you can use the interest as a deduction on your taxes. This could save you money on your federal income tax liability.
However, there are some disadvantages to fixed rate mortgages. Equity in your home builds slower than some other loans. This is because the payments during the first several years are mostly going toward the interest and not the principal of the loan. The choice of what type of loan for your mortgage really depends on you. You will need to decide if you want a steady payment with steady interest rates, or a payment that changes throughout the term of the loan.