A mortgage loan, more commonly called a mortgage, helps a person that wants to buy real, physical property (like a house) raise money to buy that property. A mortgage can also be used for other purposes by people that already own a property. The way that a mortgage loan is determined is by the value of the property that the person wants to buy, or by the value of the property already owned.

A mortgage company plays a vital part in this economic process because the mortgage company provides the loan. One of the things you have to do after choosing a mortgage company is decide between an adjustable-rate mortgage or a fixed-rate mortgage.

An adjustable rate mortgage seems better in some markets because it provides a bigger payout at first. But sometimes, a bigger payout results in a bigger payment that you have to make.

That’s why it’s wise to consider fixed rate loans.

*What Fixed Rate Loans Mean*

Fixed rate loans consist of a fixed interest rate, meaning that the market will not affect your interest rate during the established fixed rate period. The rate could also be fixed for the entire term of the loan, not just a period. The only way that a rate change occurs on a fixed rate loan is if a change occurs with your property taxes or homeowner’s insurance.

*Why Fixed Rate Loans Might Work Best for You*

If you are the kind of person who must know your monthly payments ahead of time, then a fixed rate loan will work for you.

If you are a person who excessively worries about what the market is going to do to your interest loan rate, having your loan rate locked in provides peace of mind because market whims won’t affect it.

And fixed rate loans also work well for people who plan to stay in their home a long time.

*Types of Fixed Rate Loans*

Fixed rate loans come in two main types: thirty year fixed rate mortgages and fifteen year fixed rate mortgages.

These are the most popular types, though other year types do exist. The more years a loan contains, the lower the payments.  Just keep in mind that if interest rates decrease during that time, you can’t take advantage of that decrease because your loan is fixed.

*Talk to Family and Friends*

To determine the best fixed interest rate time period, you should talk to family and friends to find out how they settled on a fixed rate loan. You should also talk to them about the mortgage company they chose. References from trusted sources go a long way in helping make the right choice.

Each time you talk to a mortgage company, you should ask them what kinds of costs they will include in their service, and ask the company you decide to go with to put that in writing.

Fixed rate loans are a great way to secure your future. Just make sure you understand how they secure it.