The most popular of all mortgages are fixed rate mortgages. For years, iLoan has offered low fixed rate mortgages for Fannie Mae loans, Freddie Mac loans, FHA loans, VA loans, Jumbo Loans, Super Jumbo Loans, Non-Agency loans and Rural Development loans. While they’re not for everyone, most people prefer a mortgage in which the interest rate does not change during the entire term of the loan and the payments include both principal and interest.
The most popular terms of the fixed rate loan are: 30 year, 20 year, 15 year and 10 year. Debt-to-income ratios and borrower comfort can often dictate what term will be most suitable.
The benefits of fixed rate are almost self-evident. The monthly payments won’t change, a borrower is protected if rates go up and can refinance if rates go down. Some detractors can be that the psychological pleasure of having a fixed interest rate for the life of the loan when a fixed period ARM might be more sensible giving the plans and goals of the person taking the loan. Additional detractors are that fixed rates are higher than other loans leading to higher mortgage payments and the rate won’t drop if prevailing interest rates improve.