Pros And Cons Of A Houston Fixed Rate Mortgage Loan Fixed rate mortgages have been the standard mortgage for many years. The rate for a Houston fixed rate mortgage remains the same for the life of the loan. By comparison, adjustable rate loans have a periodically increasing or decreasing interest rate and mortgage payment. There are pros and cons associated with fixed mortgage loans. Monthly Payment Pro: The interest rate for a fixed rate mortgage is set, or fixed, and will not change for the term of the loan. The monthly payment won't change either, with one exception. If real estate taxes, condominium fees or homeowners insurance is included and paid with the monthly mortgage payment, then the payment will be adjusted as necessary. Con: The interest rate on an adjustable rate mortgage is initially lower, but may increase over time. Choose the Term …show more content…
Con: The total interest paid over the term of the loan is higher as well as the interest rate. 15 Year Term Pro: The total amount of interest paid and the interest rate will be lower. Equity is built faster than a 30-year loan. Con: The monthly payments are greater. How Term and Interest Rates Affect the Total Paid Assumption: The homeowner wants to pay $1,000 per month and can choose either a 30-year term at 4.5% or a 15-year lowest fixed rate mortgage at 4%. The 30-year, 4.5% mortgage would allow the homeowner to borrow $200,000 and pay $1,013 per month. The homeowner can buy a more expensive home. The 15-year, 4% mortgage would allow the homeowner to borrow $137,000 and pay $1,013 per month. Over the course of the loan, the homeowner would pay very different amounts of total interest for the same loan amount, depending on which term was initially selected. The 30-year, 4.5% mortgage would cost $164,813 in interest. The 15-year, 4% mortgage would cost $66,288 in interest or provide a savings of