Why the Fixed Rate Home Mortgage Will Never Go Out of Style

Buying a home is a smart move not only for your happiness, but to ensure that you have a financial investment that you can depend on to be there for you. Of course, most of us don't have the cash to purchase a home outright and that's why securing a home loan with a fixed rate of interest is so important. But not all house mortgages are created equally. It's important to take a look at all the options and find the mortgage with the type of interest that is right for you.

The big choice will be between fixed rate and adjustable mortgages. The difference is simple – a fixed rate house mortgage has an interest rate that remains constant throughout the duration of the loan. An adjustable rate mortgage, on the other hand, comes with a mortgage rate that can change periodically. Adjustable mortgages are sometimes a good call – especially for investors – but for most, the fixed rate program is the gold standard and exactly what you need to be pursuing when you take out a home mortgage with a fixed interest rate.

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If you still aren't sure that it is right for you, here's a look some of the main reasons a fixed rate mortgage is a good idea.

  • Consistency matters a lot. With a fixed rate mortgage you'll know exactly what your monthly mortgage payments will be for the next 30 years. With an adjustable mortgage, those monthly payments can change like the wind – sometimes leaving you with a huge monthly payment that you have to struggle to make. It's easier to set a budget, to plan your finances, and to make payments when you know what they'll be for an entire year.
  • In the long run, fixed home mortgages will save you money. This is especially true right now since fixed rates are at record lows. Adjustable rates usually increase as time goes on, and when interest rates increase it will raise your monthly payments and the total amount that you end up paying for your home. Simply put, a fixed rate will save you a considerable amount of money.
  • It's also important to understand the risks that come with an adjustable rate mortgage. These were a key part of why the housing market collapsed in the early 2000s as rates climbed and millions of homeowners weren't able to make their payments. With a fixed rate mortgage, that risk isn't' present. You'll have one basic payment to make that won't change. This means that you're going to be able to avoid a considerable amount of stress.

Fixed rate mortgages are simply a better choice for homeowners. The only time you should really consider an adjustable rate is if you're planning on selling soon – something most of us aren't going to do. There are plenty of reasons that fixed rate mortgages have remained so popular – and why they'll continue to be the preferred option for years to come – but it really comes down to the simple fact that you'll end up saving money by choosing one. That alone makes them a better choice for your mortgage loan.