Fixed Rate Mortgages – What Are They?
There are a lot of different types of mortgages you can get and deciding which mortgage is right for you can be something you determine with your loan officer or with enough information can be a decision you make on your own. Perhaps the most common type of mortgage is the fixed rate mortgage. This is usually a 15 year, 20 year, or 30 year mortgage with a “fixed” rate.
If you go with a fixed rate mortgage, you’ll be subject to the rate you get for the life of the loan. If that rate happens to be 6.5%, you’ll have that rate on that loan until you either sell the home (at which point the loan is paid off) or until you refinance (which is a new loan and the “old” loan is paid off). Of course, there are issues with foreclosing which result in the loan ceasing to exist as well should that end up being a necessary step.
So, if you never refinance and stay in the same home for 30 years, you’ll have paid the 6.5% annual interest rate for the life of the loan. There is a good likelihood that your Salt Lake City mortgage will be in this category. You’ll usually pay less interest over the life of the loan if you have a 15 year loan instead of a 30 year loan, but of course that shorter duration requires a higher monthly payment.
This fixed rate is usually the main rate advertised by loan officers and mortgage brokerages. The truth in lending requires this information to be a part of any advertisement or solicitation for a new loan, so you’ll hear it.
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