Fixed Rate Mortgage Information Every First Time Homebuyer Should Know

Buying your first home is a big decision. Along with starting your career, getting married and having children, it is probably one of the biggest decisions you will make. And with important life choices come the desire to make sure the transition is seamless. Before you put an offer down on a house, it’s a good idea to figure out if a fixed rate mortgage loan is the right financing option for your situation.

If you answer yes to the following questions, a fixed rate mortgage may be the smart choice for you.

Do you plan on staying in your home for many years?

If you plan on staying in your home for five or more years and want the security of knowing your interest rate will not change, a fixed rate mortgage will guarantee it. You will enjoy a steady interest rate for the term of your loan which will result in monthly payments that will never change. However, if lower interest rates do become available, you will not be able to take advantage of the new rates unless you refinance. In this case you would have to pay additional closing costs, appraisal and title fees, so make sure you’re comfortable with your interest rate before you decide on the loan that’s right for you. With a fixed rate mortgage, your interest rate remains stable for the term of the loan – whether it’s 10, 15 or 30 years, giving you the stability that you want.

Do you find it helpful to create a budget and stick to it?

Some people don’t balance a checkbook and would never even think about keeping a budget. However, if you are someone who likes to stick to a budget, a fixed rate mortgage may be the financing option that’s right for you. With a fixed rate mortgage loan your monthly mortgage payments will remain consistent and unchanged throughout the life of the loan. This feature makes it easy to plan and budget for other expenses. Better yet, you can also budget to make additional payments on the principal of your mortgage as your salary increases, letting you pay off your loan quicker than you originally expected.

Do you like to pay off loans/debt quicker than necessary?

With a fixed rate mortgage there are typically no penalties for paying off your mortgage loan early or faster than required (check with your lender). If you choose to put more money towards your principal every month, you may do so and possibly pay less on what you borrow in the long run. It may also result in paying off your mortgage faster than expected. Think about it: right now a 30-year fixed rate mortgage may be just what you’re looking for to ease you into your first home. The payments will be lower than a 10-, 15- or even 20-year loan. However, if you find that you start making more money down the road, you can decide to make larger monthly payments toward the principal of your loan and potentially save yourself hundred, even thousands, of dollars throughout the term of your loan.

Do you like having options?

Most people like to have choices when making a big decision, especially when figuring out how to save money when buying their first house. With a fixed rate mortgage there are a variety of terms available to select from, including a 10-, 15-, 20- or 30-year term. Depending on the term you pick, you may save money in interest if you are able to choose a loan term with fewer years. However, if you know you want to keep your monthly payments lower and more manageable when you’re just starting out in your home, you may want to stick to the 30-year term for now. Besides, you can always look into refinancing down the road when a 30-year term no longer fits your ideal financial scenario.

Whether you’ve answered yes to all of these questions or just a few, a fixed mortgage may still be the right financing solution for you. But if you find your goals don’t align with these features, there is a borrowing option available that you can feel comfortable with. Whether you want a fixed, adjustable or jumbo mortgage loan, Nationwide Bank can help simplify the home loan process by walking you through the steps from start to finish. If you’ve decided that a fixed rate mortgage loan is the choice for you, get started now and secure an attractive fixed mortgage rate by submitting your mortgage application today!

About the Author

Jessica Penick is a senior content specialist at Rosetta, one of the top 10 interactive agencies in the country. Penick has a degree in English/Creative Writing from Cleveland State University. In addition to her traditional copywriting background, she also has valuable experience in the search engine optimization field. Originally from Cleveland, OH, she has also lived in London, England, as well as Tanzania and Uganda in East Africa.

home loans, HomeTown Mortgage, Monett, MO, mortgages, refinance

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