Why a Fixed Rate Loan?

Understanding Jumbo Loans and How to Qualify
November 1, 2016
Understanding the Pre-Approval Process
January 1, 2017

Most mortgages for home buyers fall under one of two very broad categories: Fixed rate mortgage loans or adjustable rate mortgage loans. The differences here are what they sound like – rates stay the same through the life of the loan for fixed rate loans, where they may adjust during the repayment period for adjustable rate loans.

We offer numerous options of both types of loans at Primary Residential Mortgage, Inc., and it’s vital to us that our clients know the benefits and drawbacks of the various types. Today, let’s take a look at fixed rate home loans.

Fixed Rate Loan Benefits


The primary benefit of a fixed rate loan is right in the name: You know your exact monthly payment for the life of the loan, no matter what. With adjustable rate loans, it’s possible for this rate to change during the life of the loan, sometimes drastically and to the point where the home owner simply can’t pay and may have to enter foreclosure. For people on a specific budget, this can be the way to go to ensure no surprises down the line.

Long Term:

Because of the security they offer, fixed rate loans are often perfect for long term, 30-year loans. It’s usually easier to commit to a longer repayment schedule with an exact understanding of how payments will look for years to come.


It’s a tangential benefit to be sure, but because fixed rate loans are a bit tougher to get and require better credit in many cases, those who are able to secure them are in a slightly more exclusive club that may contain benefits in other financial areas.

Fixed Rate Loan Drawbacks

Harder to Get:

As we just noted, being approved for a fixed rate home loan usually requires better credit, and these loans are denied more often than adjustable rate loans. It makes sense that lenders wouldn’t be enthusiastic about loaning money at fixed repayment sums to people who have had issues repaying debt in the past.

What if Mortgage Rates Drop?

The housing market can be volatile, and this includes the occasional big drop in mortgage rates. If this happens at the wrong time – say, right after you’ve locked in a fixed rate mortgage – you could find yourself paying a higher rate than people on adjustable rate loans. Unless you choose to simply grin and bear it, your only option here would be to refinance, which can be a costly process in some cases.

If you are ready to learn more about the mortgage process contact us at Primary Residential Mortgage, Inc. today.

Translate »