Mortgage Rates Today
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Fixed Mortgage Rates
A 5-year fixed mortgage rate remains the same during the 5-year mortgage term. At the end of 5 years, you must pay off the mortgage in full or refinance into a new loan term.
The loan term is usually different than the amortization period, which is the total length of time you plan to finance your home. For example, a loan may have a 25-year amortization period, which means you are expecting to pay off your home in 25 years. With a 5-year fixed mortgage, the fixed rate that you pay for each 5-year period may differ, effectively meaning that you could pay 5 different 5-year fixed mortgage rates while you are paying off your home.
Pros of a 5-Year Fixed Mortgage Rate
• Stability — You know that your mortgage interest rate is locked in for a set period.
• Time Savings — Since your rate is locked in, you don’t have to worry about taking time in the near future to renegotiate a rate.
• Market Hedge — The 5-year fixed-rate mortgage protects you if you think that rates are going to fluctuate widely in the next 5 years.
Cons of a 5-year Fixed Mortgage Rate
• Cost — Fixed-rate mortgages often have higher rates than variable-rate mortgages.
• Permanence — Average fixed rates might drop during your mortgage term, and it can be costly to renegotiate your loan before the end of the 5-year term to get a lower rate.