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Why Should I Refinance To A Fixed Rate Mortgage?

By Jim Micheals

Why Should I Refinance To A Fixed Rate Mortgage? Read here for the benefits of refinancing your mortgage into a fixed rate mortgage!

While adjustable rate mortgages often come with low interest rates, there are various risks associated with them that many borrowers do not want to deal with. When looking to refinance, there are several benefits that come with a refinance into a fixed rate mortgage.

Payment Stability

The first reason why you should refinance into a fixed rate mortgage is payment stability. When someone gets a fixed interest rate mortgage, they have the security of knowing that their interest rate and payment will remain the same for the life of the mortgage. On the other hand, a person with an adjustable rate mortgage always runs the risk that their mortgage payments will increase dramatically if market interest rates increase. This could make mortgage payments unaffordable for some people.

Hedge Against Inflation
The second reason why you should refinance into a fixed rate mortgage is that it is a hedge against inflation. Historically, the average rate of inflation is 3%. This means that by the time your 30-year mortgage is over, the average cost of living will have more than doubled. However, with a fixed rate mortgage, you are ensuring that the mortgage payment that you make will remain fixed and will not be subject to inflaion.

Rates Are Very Low

The third reason why you should refinance into a fixed rate mortgage is that mortgage interest rates are very low. With 30-year fixed rate mortgages just above 5%, now is a great time to refinance into a fixed rate mortgage. While adjustable rate mortgages offer lower rates, interest rates are sure to rise in the near future. This means that once the adjustable rate adjusts, those with adjustable mortgage will pay much more.

Related posts:

1. How Can A Fixed Rate Mortgage Be Beneficial When Buying A Home?
2. Can A Fixed Rate Mortgage Be Beneficial When Buying A Home?
3. Why Do Most Homebuyers Prefer A Fixed Rate Mortgage?
4. Should I Refinance My ARM to a Fixed Rate Mortgage?
5. Are You Concerned About Fixed Rate Mortgages?