Why People Prefer Fixed Rate Mortgages (FRM)?

Fixed rate mortgage or FRM is a decent plan for the home and real estate buyers. As the name suggests, the rate of interest remains fixed throughout the tenure of the loan. There are many features of the fixed rate mortgage that make it a lucrative option. Spend time to learn about these features in detail.

Available for Commercial and Residential Properties

The Fixed Mortgage is available for both residential and commercial real estates. As expected, the FRM for the commercial properties has higher interest rates than that for the residential real estates.

Who Prefer FRM?

There are different sets of mortgage borrowers who prefer to borrow fixed rate mortgages over other types of mortgage plans. Those buying their first home are among those who prefer these mortgage. This is because a these mortgages provides protection against rising prices. Also, those who have the plan to live in the house for long should use FRM. Finally, the borrowers who would like to know in advance about their monthly payments throughout the tenure prefer fixed rate mortgage.

Available in Different Types

These mortgages are available in a huge variety of plans. For example, the 30-year and 15-year FRM are the most popular plans in the category. Biweekly fixed rate mortgage allows the borrower to repay twice a month. Balloon mortgage is also a popular type of FRM. A similar plan in this category is called the interest only mortgage plan. Finally, there are 40 year fixed mortgage plans available in the mortgage industry.

Advantages of FRM

Here are some of the most important advantages offered by the fixed rate mortgage:

The first and the most attractive advantage of FRM is that it protects a borrower against future inflations and rise in interest rates.

The second FRM advantage is that it can help a borrower to fix his or her long term financial goals. So, they are aware about their monthly expenses right in advance.

Thirdly, there is no pre-payment penalty associated with a this mortgage plan. Thus, you can repay the full loan before the finish line of the tenure without facing any penalty.

To shop for the right Fixed Rate Mortgage plan, you can take recommendations from those having experience in this field. Mortgage quotes from various lenders can be obtained and compared online to help you make the right choice.