Fixed Rate Mortgages

The recent subprime mortgage crisis occurred because homeowners ignored a simple law of physics: What goes up must come down. This law pertains not only to the physical world, but to the world of real estate, as well. For the past decade, home values have been on what seemed to be a never-ending ascent. When the bubble burst, they came tumbling down.

Homeowners who had chosen adjustable-rate mortgages (ARMs) with teaser rates assumed that they could always refinance their mortgage out of a jam. Their modus operandi in the past was simple: When their introductory rate ended, they'd refinance to another ARM. With home values on the decline, however, they couldn't qualify for a new loan.

Now, when people are looking for a mortgage, both fixed rate and fixed term are at the top of the list

The most familiar types of home loans are the 30-year and 15-year fixed-rate mortgages. The 30-year fixed loan is more popular because it extends the payment term, resulting in lower monthly mortgage payments. However, since the payments are spread out over 30 years, these fixed-rate loans require greater long-term interest payments than its 15-year counterpart. The best part of the 30-year loan is the security of knowing that your rate won't increase.

A 15-year fixed mortgage has also been extremely popular for mortgage borrowers. It reduces the payback time to a lender, and saves you thousands of dollars in long-term interest. The monthly payments are relatively steep, however. A more affordable option might be a 20-year fixed mortgage.

Mortgage lenders are happy to give borrowers alternatives, especially if it hastens the sale of a loan. If people can't afford the traditional 30-year fixed mortgage or its cousins, they may opt for a 40-year fixed mortgage or a 50-year fixed mortgage. Recently introduced by some lenders, these types of loans aren't as widespread, but they can significantly lower monthly interest payments.

Other options are the 5-year fixed mortgage and the 10-year fixed mortgage. These are called balloon loans, because the rate is fixed for the introductory period, but the full amount of the loan is due at the end of five or 10 years. This type of loan is recommended only if you plan on paying your balance in full at the end of the introductory period, or if you have a guaranteed buyer for your home.

Fixed-rate mortgages have enjoyed a tremendous comeback as housing values have plummeted. The prices that went way, way up in recent years have gone down, down, down, and made ARMs an unreliable loan. As a result, the old standby, the fixed-rate mortgage, has returned. For homeowners who were burned by adjustable-rate mortgages, these fixed-rate loans may fix their mortgage problems for good.

Center State Mortgage is your #1 source for fixed-rate mortgages in Staten Island and New Jersey! They have the background and experience to get you the lowest interest rate on your perfect home loan! Choose Center State Mortgage for all you mortgage needs!