But you might find a fixed rate mortgage that only guarantees your rate for a period of a year or so. Such offers are usually designed for high-risk customers who might not otherwise qualify for a loan. Adjustable rate mortgages usually start out with a low interest rate, but these “teaser” rates usually don’t last for long. After the expiration date of the interest rate occurs, your rate can go up and down as the housing market fluctuates. Sad to say, that’s not always what you want to have happen. The major drawback of a fixed mortgage is that when the property value falls due to market trends, it will not be profitable for you. The holder of an adjustable rate mortgage has a payment rate that will be either high or low according to the housing market.
The main advantage of a fixed mortgage is that you know exactly how much you are paying every single month. If you’re trying to stick to a budget, a fixed rate mortgage guarantees against your payments each month increasing precipitously. There are folks who’ve foolishly been talked into taking an adjustable rate mortgage, even though they know their budget can’t accommodate a rise in interest rate. The beauty of a fixed rate mortgage is that there’ll be no guesswork around your monthly payments.
Another thing that you may not have considered is that with a fixed mortgage if your income increases you don’t have to pay anything extra. This means that you’ll still have a fixed rate mortgage with money left over to spend on whatever you want. Should you opt to pay down your mortgage early, however, you might find yourself subject to unexpected high fees.
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