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Fixed-rate Mortgage

Among the first questions any person researching residential loan asks, how long will it take to receive a mortgage quote? At what rate will the interest be? And is it a fixed-rate or adjustable rate-style mortgage?

While the answers provided to the aforementioned questions should be the sole basis on which a decision to accept or decline a mortgage, they do provide an idyllic place for a consumer to begin their quest to obtain an optimal mortgage.

Out of all the mortgage and lending products on the market, the fixed-rate mortgage is often viewed upon as being the most desirable mortgage. This is because many people like the notion of consistency in terms of what they owe and when. With that in mind, the fixed-rate mortgage works very similar to most other stable payments a person makes, i.e. for rent, utilities and insurance. They pay a set amount at the same time each month.

With respect to fixed-rate mortgages, the typical terms of length available include increments of 30, 20, 15 and 10 years. Note: Though these may be the most popular terms for taking out a fixed-rate mortgage, that in no ways guarantees every lending institution will make each available.

Unlike its alter ego, the adjustable rate mortgage, the fixed-rate mortgage generally is accompanied by a slightly higher interest rate. However, fixed-rate mortgages are ideal for the person who has: good credit, access to a down payment of 20 percent or more and plans to reside in the home for a minimum of between three and five years.

On the other side of the spectrum, an adjustable mortgage rate is ideal for the consumer who: does not have access to a large down payment, would not normally qualify for a reasonable fixed interest rate and | or does not plan to reside in the home for a minimum of three to five years. Note: Although a home owner may qualify for a fixed-rate mortgage, should they not plan to live in the home for a minimum of five years; an adjustable rate mortgage (ARM) may be a better option in light of the savings to be had from making fewer payments made towards the interest rates.