You can choose from many mortgage programs when you need a loan, but you can only choose from two types of interest rates. You can choose a fixed-rate mortgage or an adjustable-rate loan. Which is better? Both offer benefits, but many people prefer fixed-rate mortgages over adjustable-rate loans. Here are three reasons people like loans with fixed rates.

1. They Lower Your Risks

The key difference between these two interest rate types is their durations. A fixed-rate mortgage keeps the same rate for the entire loan. If you get a 30-year loan, the interest rate stays the same for 30 years. If you get a 40-year loan, it stays the same for 40 years. A fixed-rate loan does not provide this stability. Instead, the rate changes from time to time. As a result, you have a lower risk of having a huge increase in your rate if you stick with a fixed-rate loan. You can feel confident that your loan rate will never change, even if interest rates in the economy increase drastically.

2. They Are Predictable

The second reason people prefer fixed-rate mortgages is for the predictability they offer. When you borrow money to buy a house with a fixed-rate loan, you will find out your payment amount. This payment amount will never change. If you keep your loan for the entire loan duration, you will always have a predictable payment. People like predictability with their finances, so this is a significant benefit if you need a mortgage.

3. You Can Buy Down the Rate with Points

The last thing to know is that you can buy down your rate with points. If you want a predictable rate with no risk of changing, you can choose a fixed-rate mortgage. If you want a lower rate than what the bank offers, you have the option of buying down the rate by purchasing points. When you purchase points, your rate decreases. If you are not sure how this works or if it is a smart move, ask your lender. Your lender can explain this to you and other options.

When you decide to get a mortgage loan, you can compare the terms on the mortgage programs you qualify for with your financial state. You can also ask your lender about the interest rate options you can choose from for your loan. Contact a lender to learn more about loan types and rates.

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