The Benefits Of Getting A Fixed Rate Mortgage In Today's Market

It does not matter if you are looking to purchase your first home, or are looking to upgrade to a bigger, better home; right now is a buyer’s market. Because there are so many homes on the market right now you have a huge variety to choose from, and because of the huge selection, that starter or dream home is selling for a very reasonable price. Also, if you are a first time homebuyer, you often qualify for special incentives and tax breaks that make owning your first home much more attractive than renting.

Now even with the incentives, unless you can pay for this new home in full with cash at the time of the sale, a home mortgage will be required. Typically twenty percent of the purchase price is required at the time of the sale, and the rest is borrowed from some type of lending institution. This is why it is so important to act now if you have been thinking of buying; some of the first time homebuyer incentives can significantly lower the down payment required.

Most likely the largest amount money you will ever borrow will be your home mortgage. If you are looking to purchase a ninety to one hundred thousand dollar home, you will probably be looking at getting a mortgage note around seventy or eighty thousand or more. You will make monthly payments to the lender that will be a combination of principal and interest. In the beginning, most of the monthly payment will actually be going towards the interest accumulated on the loan, thereby not actually reducing the principal amount.

Because this is the case, you really need to focus on getting the best possible loan terms with the lowest interest rate. The lower the interest rate, the less it is costing you to borrow this money, and the sooner you will actually be paying off the principal of the loan. You also need to be aware of the different types of loans. A fixed rate mortgage means that the interest rate you are charged is guaranteed to stay the same. One example; you get a fixed rate, thirty year mortgage at the rate of five percent in 2009. You pay five percent interest on that mortgage no matter what the economy does until 2039.

Another type that is not as favorable is the adjustable mortgage. As the name implies, the rates adjust to the national average every year or two. So if national interest rates rise, your home mortgage interest rate will increase. If your interest rate increases, so will your monthly payment because it reflects the entire loan and the interest terms that came with it.

Right now, with interest rates lower than they have been in years, is an unbeatable opportunity to get a low, fixed rate home mortgage. Purchasing your new home now, with the prices, interest, and the market being where they are, presents an opportunity you just can’t pass up. Not to mention the peace of mind you get knowing exactly what your interest rate and monthly payment will be for the entire term of your loan.

Ben Olson is a Mortgage Consultant with Mortgages Unlimited, and has been certified by the Minnesota Mortgage Association as a Minnesota Mortgage Specialist (MMS), and has received their national designation, Certified Residential Mortgage Specialist (CRMS). The time, training, and commitment that Ben has taken to receive these designations have put him in the top 1% of his colleagues nationwide. Learn more about fixed rate mortgages and the opportunities for first time home-buyers from a certified professional like Ben.