FIXED RATE MORTGAGE LOANS
The Essential Mortgage team is proud to offer a wide variety of fixed-rate mortgage loans. Available on conventional, FHA, VA or USDA loans, fixed-rate mortgages offer Louisiana residents a flexible option for all budgets and homebuying needs.
WHAT ARE FIXED-RATE MORTAGE LOANS?
Fixed-rate mortgages are home loans that come with a set, consistent interest rate for the entire length of the loan term. The interest rate does not change over time, and homeowners can only change their rate by refinancing into a new mortgage loan.
Because fixed-rate mortgage loans offer consistency regardless of external economic factors, they typically come with higher interest rates than adjustable-rate loans — at least at the beginning of the mortgage.
QUALIFYING FOR A FIXED-RATE MORTGAGE LOAN
As with any mortgage loan product, qualification for a fixed-rate home loan is dependent on a number of financial factors — things like your credit score and credit history, your debts and income, your employment status and history, and more. The exact type of fixed-rate loan you’re applying for (conventional, VA, USDA or FHA) also plays a role in the requirements you’ll need to meet to qualify.
ADVANTAGES OF A FIXED-RATE MORTGAGE LOAN
The biggest advantage of a fixed-rate mortgage loan is that it offers consistency. For a Louisiana homebuyer, that means predictable, consistent payments you can rely on for the life of the loan. This makes monthly budgeting easier, and it also protects you from the fluctuations of the economy and housing market. Fixed-rate mortgages are ideal for buyers who plan to stay in their home for a while.
All in all, advantages of fixed-rate loans include:
- Your interest rate can’t increase
- Consistency and predictability make budgeting easier
- Offers protection from inflation and economic changes
- Can save you money if you stay in the home long-term
DISADVANTAGES OF A FIXED-RATE MORTGAGE LOAN
There are, of course, some drawbacks to a fixed-rate mortgage loan, the biggest being its higher rate. Fixed-rate loans usually come with higher interest rates when compared to adjustable-rate ones (at least at the beginning of the mortgage). This can mean paying more in interest and a higher monthly payment for the first years. This is why fixed-rate loans aren’t a great idea if you only plan to stay in the home a short while.
Altogether, the disadvantages of a fixed-rate loan include:
- Higher interest rates
- Higher up-front costs
- Can cost you money if you only stay in the home for a short time
- Requires a refinance to take advantage of lower market rates
IS A FIXED-RATE MORTGAGE LOAN RIGHT FOR YOU?
Generally, a fixed-rate loan is your best bet if you’re planning to buy your forever home. It can protect you from inflation and rate changes in the future, and it can help you better predict and budget for your monthly payments over time. This can be a huge benefit if you have inconsistent or fluctuating income.
On the other end of the spectrum, if you’re only planning to be in the home for a few years, a fixed-rate loan might not be your best option. If rates are expected to drop in the future, you may also want to consider another loan.
Remember, though: you’re not stuck with your fixed rate forever. If rates drop, your credit improves, or you just want to tap your home equity, you can always refinance your loan. This could lower your rate, monthly payment or both.
NEED MORE HELP?
Do you need help determining if a fixed-rate mortgage loan is right for your Louisiana home purchase? Then reach out to Essential Mortgage today. We’re here to help.