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Can I Save Money With A Fixed Rate Mortgage?

By Kevin Landis

Over the past few years, many people have become a fan of adjustable rate mortgage, which come with very low initial interest rates. While the initial interest rate may be attractive, most people would actually save money by getting a fixed rate mortgage. You can save money with a fixed rate mortgage a few different ways.

Lower Fees

The first way that you can save money with a fixed rate mortgage is by saving money on fees. Fixed rate mortgages are generally less risky loans than adjustable rate mortgages. Because they are less risky, banks do not have to charge as much money in the form of fees as they do for adjustable rate mortgages. Also, for those with less than 20% equity, PMI is less with a fixed rate mortgage.

Less Interest Over Time

The second way that you can save money with a fixed rate mortgage is that the borrower will pay less interest over the course of the mortgage. While interest rates are initially much lower with adjustable rate mortgages, eventually interest rates will increase. When interest rates increase, so will the mortgage interest rate and payment. Because of this, most ARM borrowers will spend more money over time than a fixed rate borrower.

Less Need to Refinance

The third way that you can save money with a fixed rate mortgage is that a person with a fixed rate mortgage will have less of a need to refinance in the future. Refinancing a mortgage costs thousands of dollars, and those with adjustable rate mortgages will be far more likely to need to refinance their mortgage than a person with a fixed rate mortgage.

Related posts:

1. Can Mortgage Refinance Save Me Money?
2. Can I Save Money With An Adjustable Rate Mortgage?
3. How Can I Save Money On My Mortgage?
4. Do I Pay A Higher Interest Rate On A Fixed Rate Mortgage?
5. How Can I Save Money On My Mortgage Interest Rate?