Fixed Rate Loan


Fixed Rate Loan

Fixed Rate Loan

A fixed rate loan is considered to be a home or mortgage loan in which the interest rate on the loan will stay the same for life of the loan, no matter how the market is doing. The biggest factor of a fixed rate loan is that the interest rate over every time period of the home or mortgage loan is known at the time the mortgage is originated. For example, if you take out a home or mortgage loan and the interest rate is fixed at 10%, then the 10% interest rate is amortized over the life of the loan and your payments will never change.


A fixed rate loan can have some advantages and disadvantages. Of course, one advantage of a fixed rate loan is that your payment and your interest rate will stay the same for the duration of your loan. A fixed rate loan will not offer you any surprises with the fluctuation of the market. A fixed rate loan allows you to have stability and helps to make budgeting easier. A fixed rate loan is pretty easy to understand so that many first home buyers know what they will be getting with a home or mortgage loan. A disadvantage of a fixed rate loan is that some fixed rate loans can be too expensive for some borrowers, meaning if wanted take advantage of a fixed rate loan you would need to refinance and that may cost a few thousand dollars in closing costs. A fixed rate loan also does not allow for rate breaks or early-on payments. When you are thinking about whether or not a fixed rate loan is right for you, you should contact a home or mortgage lender to get help in finding out what your options with a fixed rate loan.