Fixed rate mortgages, also known as FRMs, offer the advantage that you know exactly how much your monthly repayments will be for a fixed length of time, known as the fixed term. This is often advantageous for first time buyers who have very tight budgets.
In the USA, the fixed term is the entire length of the mortgage. In other places, particularly in the UK and Canada, the fixed term is usually for the first few years of the mortgage, after which an adjustable rate, or variable rate, is charged. In the US, this latter arrangement is often called a hybrid adjustable rate mortgage.
Before committing yourself to a fixed rate mortgage, or any other type of mortgage, and preferably before you meet your bank or other financial advisor, calculate the following:
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