When looking at different mortgages and mortgage rates, you may want to consider how the option you choose will change your current lifestyle – if at all. In most cases, the mortgage payment will be much larger than your rental or lease payment, but if you choose the right loan, you won’t have to worry about making this payment each month. This is why more borrowers are choosing fixed rate mortgages over other mortgage options. Here’s what you need to do to be sure you that can secure this kind of mortgage.

What is a Fixed Rate Mortgage?

A fixed rate mortgage is a mortgage in which the interest rate never changes. From the time you begin to pay off the mortgage to the time you complete paying it off, you will be paying the same amount each and every month. Many people enjoy this kind of mortgage contract because it allows them to plan ahead for their expenses. It also allows them to not be subject to rising interest rates or to any changes in the market. These mortgages can be extended over 15 or 30 years. However, since these payments often tend to be at a higher monthly cost in comparison to ARM mortgages, they aren’t for everyone. Here are the ways you can increase your odds of qualifying.

Have Good Credit

First of all, you need to be able to show the lender that you are able to make the payments every month – and that means you need to have a good credit rating. You can check your credit score by contacting any of the three major credit reporting agencies – TransUnion, Experian, and Equifax. Or you can check with some credit card companies as they can access your accounts if you give them permission. You can help to increase your credit score by paying your bills on time and reducing your debt loan – credit cards especially.

Have a Steady Income Level

You will also need to show the lender that you are capable of making your payments every month, which means that you need to have a steady source of income. If you are employed this is easy to prove as you can show lenders your pay stubs. If you work as a freelancer or are self-employed, you will need to show receipts and invoices from at least a year of employment to help show that you are looking to continue to make money in the future.

Talk to Many Lenders

Of course, in order to get the best interest rate on your fixed rate mortgage, you will want to check with a variety of different lenders. This will help you get the best rate for your specific needs. In addition to talking with your local banks and credit unions, be sure to also look online to compare interest rate quotes and other agreement terms.

The fixed rate mortgage is for the borrower who likes the security of having the same payments every month. And while many lenders will try to talk borrowers into the ARM loans because the interest rates can be very low at times, the varying monthly payment may be lower, but it also might be higher than you expect it to be.

This entry was posted on Friday, July 10th, 2009 at 1:52 pm and is filed under Fixed Rate Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.