2 Benefits of Fixed Rate Mortages

Choosing a home loan isn’t always as straightforward as you may think. There are numerous loan programs and products on the market. Each is designed for a specific purchase. Many buyers opt to apply for fix rate mortgages in Danville, Illinois. While all loan programs have their pros and cons, many buyers prefer the benefits of fixed rate products.

No Guessing Games

One of the greatest benefits of a fixed rate mortgage is that homeowners always know to the penny what their monthly house payment will be. This makes it easy to budget and there are never any surprises – with one exception. The cost of escrow may go up year after year depending on real estate tax evaluations. Still, your mortgage company should send you information with this new amount well before the new payment amount takes effect so you can plan accordingly.

Emotional Security

Some home buyers opt to apply for an ARM mortgage. This is an adjustable rate mortgage that can change after a period of 3 years or less. A benefit of a fixed rate is that homeowners have more emotional security. They don’t have a what-if scenario hanging over their heads and don’t have to worry about whether they’ll be able to afford their home when their rate adjusts in the future.

Are You a Candidate for a Fixed Rate Loan Product?

Not everyone can secure this type of loan. Traditionally, fixed rate loan products have been reserved for individuals with decent credit. If you’re someone who has had credit issues in the past, you may not qualify for a fixed rate. Usually, potential buyers with bankruptcies, judgments, repossessions, foreclosures, and other severe credit problems are limited to ARM mortgages or sub-prime mortgage products that may or may not come with a fixed rate. And, if they do come with a fixed rate, the interest can be high. Before you agree to a fixed rate loan product with a high interest rate make sure that there are not prepayment penalties so that you can refinance the loan for a lower rate in the future.

Work with a Mortgage Broker

When shopping for fix rate mortgages in Danville, illinois, it’s nice to work with a broker who has access to all different lenders and loan products. This person can be your biggest advocate and help you find a loan that fits your budget now as well as in the future.