When you apply for a mortgage, one of the decisions that you will need to make is whether to take out a fixed or adjustable rate mortgage. Those who are looking for steady, long-term, predictable rates will want to consider a fixed rate home loan.
What is a Fixed Rate Loan?
With a fixed rate home loan in Washington state, the interest rate at the start of the loan is also the interest rate which you will pay for the entire lifetime of the loan. It is locked in place or “fixed,” and thus the name.
What are the Benefits of a Fixed Rate Loan?
Here are a few reasons to consider a fixed rate loan:
With a fixed rate loan, there is less financial uncertainty. If interest rates in the area rise, you can rest assured that your interest rate will not. The loan will remain as affordable in the future as it is now.
The cost of a fixed rate loan is easy to calculate. The same cannot be said for an adjustable-rate mortgage over a long span of time, because there is no way to predict how much the ARM may cost in the future.
Who Should Consider a Fixed Rate Loan in Washington?
Whether you are purchasing a home now or you are considering refinancing in order to turn an adjustable-rate mortgage into a fixed rate loan, here are some situations where it might be appropriate:
- If you are planning to stay in your home for the indefinite future, a fixed rate loan can be a wise choice. You do not need to worry about interest rates ballooning.
- If you have an adjustable mortgage rate now, and would like to lock a rate in for the long term, it might be time to refinance to a fixed rate mortgage.
Deciding between a fixed rate mortgage and an adjustable rate loan can be a challenge. If you have questions along the way, we can help. We have guided many buyers throughout Washington state in choosing a mortgage format to meet their short and long-term goals.