What are Fixed Rate Mortgages?
With this type of mortgage your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be stable. Fixed-rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. There are also bi-weekly mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 months worth, every year.
A fixed rate mortgage is the type of mortgage where your interest rate for repayment is fixed for a specified amount of time so you know exactly what your mortgage payments will be in that period. They can vary in terms from short periods several months – up to an entire 25 year mortgage term. Fixed rate mortgages offer certainty and reliability and can help you budget effective. The problem with them is that if the general interest rate falls sharply you lose out financially. The best time to take one out is when interest rates appear likely to rise in the near future.
