Fixed rate loans are funds granted to borrowers that carry an interest rate that will stay consistent and not fluctuate with the market until the end of the repayment term. A fixed rate loan can be offered by mortgage brokerages, lending institutions, personal investors and the government. This type of financing, as applied to mortgages, is one of the most popular types of mortgage methods. A 30 year program is recommended for those homebuyers that plan on owning the home for a long period of time. An alternative source of financing can be adjustable interest rate loans.Adjustable interest programs are offered to borrowers who anticipate either the resell or refinance of their original mortgage, or the national interest index to lower. Choosing to borrow money utilizing fixed rate loans is wise when the national interest indexes are low. An adjustable interest type of financing plan should be taken out when interest indexes are expected to be even further lowered, or there is a short term ownership of the property (for example, buy, fix up, and resell). Those interested in obtaining a fixed rate loan should contact their local lending institution for current indexes available to them.
In order to get the best program, a borrower should have good credit. Good credit is categorized as having a FICO score of 690 or above. Credit scores directly determine the interest on fixed rate loans as well as adjustables. While adjustables tend to be lower than a stable index program, in a time of national low interest, the fixed rate loan can hold interest charges just as low as and sometimes lower than adjustables. In regards to a home purchase during low stable times, choosing this type is the best option. Some also choose the financing with interest only payments. This method maximizes savings of one’s monthly income.
Since credit scores directly determine the interest charge, it is wise for a borrower to discover their credit score and raise it as soon as possible. The most effective way to quickly raise a credit score to obtain a fixed rate loan is to pay down credit card balances. The Bible says in Romans 13:8 “Owe no man anything”. This includes credit card debt. Not only does debt do detrimental damage to individuals physically (lower credit scores, higher insurance premiums, higher rental deposits), but it damages a person spiritually. God said Christians cannot serve two masters. If debt is one master and God is the other, living in this society forces all to choose debt. To become spiritually disconnected with God is far worse than any happiness obtained from the purchase of material possessions.