If it sounds like a duck, it could be a green tree frog. Same thing with what one may consider the best fixed rate mortgage. The details are what are important.
In a fixed rate mortgage, the interest rate remains the same for the entire term of the loan. You always know exactly how much your monthly payments will be for the duration of the loan. The advantages are obvious, you can budget your life around a fixed payment. It is usually good for a borrower who will stay with the property for an extended period of time.
If interest rates tend to rise during the early years of the mortgage, then that may be another good thing for the home loan borrower. But if the interest rates are tending downward, then locking into a fixed rate at a higher rate may not be the best fixed rate mortgage for you. When the stage is set for you to lock in the mortgage be very conscious of the rates. A difference of even an eighth of a point can cost you a lot of money over the long term.
Another important aspect of finding the best fixed rate mortgage is in the Good Faith Estimate. This document is required on any home loan in every state. It is an estimate of almost all of the known costs at the time of preparation and presented to the borrower before the actual signing of the documents. Go over this carefully.
You may see that the lender, who offered you the best rate, may have a much higher estimate in the closing costs due to their own operating expenses. It is not uniform for each lender. Some processing fees, preparation, title insurance, etc. may cost you more than another lender who is offering you a similar loan. That is number one. But also, they want to lock you into a easy feeling of contentment so that you are committed both financially and mentally to the lender, until the time of closing when the actual costs rather than the estimate becomes the focal point of contention. After all it is just call a Good Faith Estimate.
There are many details to go over and it is in your best interest to find out as much as possible to prevent a costly closing that makes you feel very uncomfortable at the time you expect to be the most joyful.
Ms. Galbraith is now a consultant and has been in the mortgage business since the late 80's. She offers many useful tips that can help anyone in need of a fixed rate mortgage or a home equity or 100% mortgage or 100% home loan at her website for finance. There is up to date news of the lenders and rates at her Direct Mortgages Blog .
