Fixed Rates Can Mean Lower Payments

While the common wisdom for the past few years has been that 30 year fixed mortgages are more expensive and rigid than their ARM Adjustable rate counterparts, refinancing into a 30 year fixed mortgage doesn't always mean moving to higher payments or sacrificing flexibility. Fixed Rate mortgages have come a long way, and in many cases present an excellent option for borrowers who are in ARM mortgages to lock in a fixed rate before the payment on their ARM adjusts and skyrockets. Fixed Rate mortgages are even available as a viable option for borrowers who prefer the flexibility and minimum payment options of Option ARM mortgages, but need to refinance into the security and predictability of a fixed rate.

Even though refinancing into a fixed rate mortgage may mean slightly higher payments then a lower rate ARM you have to think logically. If you let your ARM begin to adjust the increase in payments will eventually make the ARM more expensive then the fixed.

Most consumers like fixed rate mortgages simply because of the security factor in having one. The customer feels safe about the mortgage transaction, knowing that their mortgage payment and interest rate will never change on them (unless of course taxes and insurance are included into the mortgage payment and those happen to increase). While there are often times many good reasons to go ahead and finance your mortgage on an ARM loan, more times than not most consumers opt for a fixed rate and a fixed payment.

The spread, or rate difference, between short term adjustable rates and fixed rates has decreased drastically in recent times. Many of the options previously only offered through adjustable rate mortgages, such as interest-only options and pay-options, are currently offered on fixed rate loans as well.

Fixed Rate Mortgages are good for those who plan on holding the Subject Property for a long period.

Fixed Rates can mean lower payments when compared to an ARM loan about to adjust in the near future. While, the fixed rate may have higher payments in the short term when compared to an subprime ARMs. However, when these ARM Loans adjust the payment is likely to be higher and may continue to grow until ceiling is reached.

» DISCLAIMER: The information contained in this article on 'Fixed Rates Can Mean Lower Payments' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.