Low Fixed Rate Mortgage - As short term interest rates rises, fixed rate mortgages are become more popular. Fixed rate mortgages are more stable, the payment does not change throughout the life of the loan.

A low fixed rate mortgage is great for borrowers who plan on staying the home for a longer length of time.

Low Fixed Rate Mortgage Loans are loans that are eligible to be delivered to FNMA/FHLMC, which in turn are sold to investors as low risk, income producing investments. Since low fixed rate mortgages can be sold on the secondary market immediately and banks can recoup their capital investments shortly after making the loans, and do not have to take 30 years to collect on their investments, all lender banks, regardless of their market capitalizations, offer this type of mortgages, thereby making the Prime Loan (Low Fixed Rate mortgages) market highly competitive. The underwriting guidelines of Low Fixed Rate mortgages are more stringent than other types of loans.

In order for a loan applicant to qualify for the lowest fixed rate mortgage available, he should have a very good credit profile, preferably with credit scores of over 720 and without any adverse credit history. He should also be able to prove that his gross income is at least 2.5 times the total debt, including the proposed mortgage payments. He must also prove that he has enough money to put at least 20% of the house value as down payment, cover all closing costs, and left-over reserves equaling 3 to 6 months housing expenses after settlement. For homebuyers and homeowners who do not meet one or more of these criteria, many banks offer alternative loan programs.

For homeowners with Adjustable Rate Mortgages (ARM) and those with Hybrid mortgages, those that have an initial fixed rate period of 2 to 3 years then turn into an adjustable for the remainder of the loan term, and do not intend to sell the property, refinancing the current mortgage debt into a Fixed Rate Mortgage may be a good idea. When interest rate climate is in an upward trend, it is often advantageous for most homeowners to have fixed rate mortgages.

Borrowers should realize that while a 30 year fixed mortgage offers protection against rate increases, this protection comes with a price in the form of a slightly higher interest rate.

In a normal interest market condition, loans with longer terms have higher interest rates. This effect is also evident in Certificates of Deposits, or CD's, and treasury bonds. 10-year bonds often offer slightly higher interest rates than 1-year bonds. In home financing, 30-year fixed rate mortgage almost always has higher interest rates than 2/28 hybrid mortgage, which has a fixed rate period in the initial two years followed by twenty eight years of adjustable rates. However, in a rare inverted interest market condition, the 30-year fixed rate loan can have the same low rates as that of any adjustable rate mortgage.

Low fixed rate mortgages are best suited for the long term borrower. Although it seems most borrowers want a low interest rate for a long term, it is more likely to get a lower rate with an ARM (adjustable rate mortgage) product as the lender will tend to raise the rates for longer term loans.

Low fixed rate mortgages with the lowest rates are usually only offered to borrowers with excellent credit and who have a 20% or more down payment.

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