Fixed Rate Mortgage Loan

Fixed-rate mortgage is any home mortgage whose interest rate stays the same over the life of the loan, whether that lifespan is the traditional 30 years or 15 years, as some borrowers choose. The interest rate at the time you purchased your home is the same interest rate you pay from your very first mortgage payment, to your last at the end of the loan term.

Fixed-rate mortgages protect homebuyers and homeowners from rising rates. Plus, with Cornerstone First Mortgage, you get the flexibility of selecting the length of your loan term: 10 years, 15 years,20 years, 25 years, or 30 years, depending on loan type. The shorter the loan term, the higher your monthly mortgage payment will be and the faster you will build equity in your home through paying down your mortgage balance.

If you plan on staying in your home for a longer time frame, a fixed-rate mortgage could be the right solution for you since this option features:

• The interest rate stays the same over the life of the loan
• Protect you from rising rates in the future
• Predictability is a big plus
• Cornerstone First Mortgage offers fixed-rate loans with terms of 10 years, 15 years, 20 years, 25 years and 30 years
• ARM (Adjustable Rate Mortgage) loan introductory rates may be lower than what you qualify for in a fixed-rate mortgage

PROS:

Predictability is the big plus. You know going into your home mortgage loan exactly how much interest you will pay over the life of the loan. In the early years of the life of your home mortgage loan, when your monthly payments will go mostly toward that interest rather than toward the loan principal, you are able to shorten the term of the loan at will by making periodic additional payments against the principal, if you are able and if you wish to. If you choose a 15-year fixed-rate loan over a 30-year fixed-rate loan, you will own your home in half the time and, generally speaking, for less than half the total interest cost of a 30-year fixed-rate mortgage loan.

CONS:

If mortgage rates fall after you purchase your home, your mortgage rate will not go down along with the market rates. Also, the initial rate you qualify for on an adjustable-rate mortgage loan (ARM) may be lower than the rate you would qualify for on a fixed-rate home loan.

Cornerstone First Mortgage offers fixed-rate loan terms of 10 years, 15 years, 20 years, 25 years and 30 years, depending on loan type.

The term “conforming” only comes into play if your home mortgage loan is a Conventional loan and means that the home mortgage loan in question meets the standards set by the Government Sponsored Entities (GSE) Fannie Mae and/or Freddie Mac for insuring the loan. If you are hearing the word “conforming” regarding your home mortgage loan, it means you are dealing with a conventional mortgage loan.

That, of course, depends on the underlying conditions of the real estate and mortgage market, which vary according to a number of factors, including but not limited to seasonal shifts, shifts related to the U.S. economy in general, and shifts caused by certain far-reaching world events. In comparison to an adjustable-rate mortgage, though, you may find that the introductory (sometimes called a “teaser”) rate you qualify for with an adjustable-rate mortgage loan is lower than the rate you qualify for in a fixed-rate mortgage loan.

But when the introductory rate period is over (typically after 5 years, 7 years, or 10 years, depending on loan type), if you choose an adjustable-rate loan at the time of purchase, your home mortgage loan’s interest rate would then be subject to fluctuations according to the volatility of the real estate and mortgage market. It could go up; it could go down. What that may mean for the total interest cost of the home mortgage loan is something that you really should speak with your Cornerstone First Mortgage advisor about.