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How To Choose The Best Fixed Rate Mortgage

By Carter P. Mellon

An FRM is not complicated; it is a fixed rate, fixed term home loan. The choice of an FRM is the choice of paying less each mortgage payment, but paying over a longer time. The best thing is to locate the right balance between the loan you can afford for the shortest FRM.

Longer term FRMs can cost a lot more over time than shorter term ones. A short term FRM obviously has an increased monthly payment than a longer term one; for example, a 10 year FRM can have monthly payments that are twice as high as a 40 year FRM.

In addition, the interest rate risk the bank takes on a forty year home loan is much greater than on a ten or fifteen year mortgage, since so much more in interest rate movements can occur during this extended time.

Because of these various mixes, the 15 to 30 year FRMs are usually the ones that give the best mix of lower monthly payments with reduced overall costs and lower interest rates. Needless to say, forty year mortgages will have the highest rates of all.

This is the reason a lot of borrowers opt for the 15 FRM.

A mortgage broker can calculate the mortgage payment you will have on a fifteen year mortgage. If not, you can move the term of the mortgage you apply for up gradually until you find one that is affordable for you yet gives you the best rate.

Even with a longer term home loans, remember that you have the option to pay your loan off sooner. Most young homeowners have no choice but to take the lower payments, but as their finances improve, they can make higher payments over time. If you make additional payments on the mortgage, you are effectively lowering the term of the loan.

Working with a mortgage consultant, or using the internet, you can calculate how much you will have to pay monthly on a given term loan. These payment charts are easy to locate and use, but a mortgage broker may make the process easier for you, without any obligation on your side.

The ideal solution is to find the balance between the term of the Fixed Rate Mortgage that will be most affordable for you, and at the same time keeping the interest rate as low as possible.

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Article Citation
MLA Style Citation:
Mellon, Carter P. "How To Choose The Best Fixed Rate Mortgage." How To Choose The Best Fixed Rate Mortgage. 2 Jul. 2010. uberarticles.com. 10 Oct 2014 <http://uberarticles.com/web-owners/marketing/how-to-choose-the-best-fixed-rate-mortgage/>.

APA Style Citation:
Mellon, C (2010, July 2). How To Choose The Best Fixed Rate Mortgage. Retrieved October 10, 2014, from http://uberarticles.com/web-owners/marketing/how-to-choose-the-best-fixed-rate-mortgage/

Chicago Style Citation:
Mellon, Carter P. "How To Choose The Best Fixed Rate Mortgage" uberarticles.com. http://uberarticles.com/web-owners/marketing/how-to-choose-the-best-fixed-rate-mortgage/


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