If it sounds like a duck, it could be a green tree frog. Same thing with what one may consider the best fixed rate mortgage. The details are what are important. In a fixed rate mortgage, the interest rate remains the same for the entire term of the loan. You always know exactly how much your monthly payments will be for the duration of the loan. The advantages are obvious, you can budget your life around a fixed payment. It is usually good for a borrower who will stay with the property for an extended period of time.
Getting the best fixed rate mortgage is a task in and of itself with the current mortgage market the way it is. We have seen interest rates move from 4.8% to 5.6% and back down to 5.1%. Sometimes there are daily movements of as much as a full percentage point. This makes it very difficult to get the best home loan available. If you go on a Monday and get quoted at 5.2% you could very well see rates at 5.5% by Friday. This makes the mortgage decision even that much more difficult.
Some adjustable rate mortgages have low initial rates because they create negative equity - that is, the payments made during the initial period of the mortgage are so low as to not even pay all the interest that is accruing, much less touch the principal. The additional interest that is not covered by initial payments is added to the debt of the mortgage, so the homeowner is faced with mounting debt to pay off (or owns less and less of their home, if they made an initial down payment upon purchase). This can be a financially dangerous situation. In fact, many mortgage borrowers have already opted for fixed rate mortgages because of some of the benefits they offer, namely the fixed payment, amortization and rate to name a few. However, others who are new to fixed rate mortgages are probably nervous about whether they are getting the "best deal" out there.
To find the best fixed rate mortgage at the moment it is certainly worth shopping around as new deals constantly come on to the market and providers pull deals that have reached their allowance from the market. There have been some great value deals for two year fixed rate mortgages on the market but they are usually on the market for a short amount of time.
If you want to better understand the different terms and how the mortgage market works there is a wealth of information available on the internet. You could do your own research to find the best fixed rate mortgage however I would recommend using the services of a mortgage broker. The best deals often don't last long, it's a get it before its gone situation so to ensure you don't miss out it is recommended you use their services.
Getting the best fixed rate mortgage is a task in and of itself with the current mortgage market the way it is. We have seen interest rates move from 4.8% to 5.6% and back down to 5.1%. Sometimes there are daily movements of as much as a full percentage point. This makes it very difficult to get the best home loan available. If you go on a Monday and get quoted at 5.2% you could very well see rates at 5.5% by Friday. This makes the mortgage decision even that much more difficult.
Some adjustable rate mortgages have low initial rates because they create negative equity - that is, the payments made during the initial period of the mortgage are so low as to not even pay all the interest that is accruing, much less touch the principal. The additional interest that is not covered by initial payments is added to the debt of the mortgage, so the homeowner is faced with mounting debt to pay off (or owns less and less of their home, if they made an initial down payment upon purchase). This can be a financially dangerous situation. In fact, many mortgage borrowers have already opted for fixed rate mortgages because of some of the benefits they offer, namely the fixed payment, amortization and rate to name a few. However, others who are new to fixed rate mortgages are probably nervous about whether they are getting the "best deal" out there.
To find the best fixed rate mortgage at the moment it is certainly worth shopping around as new deals constantly come on to the market and providers pull deals that have reached their allowance from the market. There have been some great value deals for two year fixed rate mortgages on the market but they are usually on the market for a short amount of time.
If you want to better understand the different terms and how the mortgage market works there is a wealth of information available on the internet. You could do your own research to find the best fixed rate mortgage however I would recommend using the services of a mortgage broker. The best deals often don't last long, it's a get it before its gone situation so to ensure you don't miss out it is recommended you use their services.
About the Author:
This article has been written by the author, Nicholas Brown. Should you require any moreBest Fixed Rateplease visit his Best Bank resources!
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