Pittsfield, MA -- (SBWIRE) -- 05/02/2013 -- Real-estate-yogi.com is familiar with mortgage interest rates, and is happy to share its knowledge, including:

- Defining fixed Rate Mortgage
- Disadvantages of Fixed Rates
- Pluses and Minuses of ARMs
- Comparing Rates and Lenders

Fixed Rate Mortgage Defined

Simply put, a fixed rate mortgage loan has an interest rate that remains unchanged for the life of the loan. The draw of fixed rates is that a homeowner always knows exactly what his interest rate is, no matter what the market is doing. This makes it much easier to budget the mortgage payment each month, which results in few, if any, missed or late payments. Many homeowners prefer the fixed rate because it is less risky than a variable rate loan. This will be discussed further on.

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Drawbacks to Fixed Rates

While numerous people prefer Fixed Mortgage Rates Today, there are some negatives to it. One is that it can be harder for some borrowers if their credit isn’t great. Bankers simply prefer to approve fixed rate mortgages for high-credit-rating customers. Another disadvantage to fixed rates is that, if rates drop, the person holding a fixed rate mortgage will be paying more than one who has an adjustable rate mortgage (ARM). A third drawback to fixed rates is that they are rather narrow in scope, meaning that there are not as many options with this type of mortgage as with ARMs.

Positives and Negatives to ARMs

It’s a good idea to perform fixed rate comparisons to adjustable rates. Above, the pluses and minuses of fixed rates were discussed; the opposite will be addressed now. One positive for ARMs is that they have lower rates and payments early in the life of the loan. Also, people who have ARMs don’t have to refinance every time rates fall; they can just watch. However, if rates rise, those with ARMs have to come up with more money. ARMs can also be confusing, and it takes effort on the part of lenders and borrowers to clarify them.

Evaluating Rates among Lenders

Fixed mortgage rates today fluctuate from state to state and from lender to lender. The variation can be as much as 3 percentage points. The best way to compare them among several lenders is to go online. Check out several financers and see what their fixed and adjustable rates are. Go with the gut in which lender to choose; it seldom leads one astray.

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