What is a fixed rate mortgage?
This is the most common home loan arrangement in the U.S. With a fixed-rate mortgage the loan’s principal and interest are amortized, or spread out evenly, over the life of the home loan, giving you a predictable monthly payment. The upside is, if rates are low, you can lock in for as long as 30 years and protect yourself against rising rates. However, if rates fall you can’t change your rate without refinancing the home loan, and that could cost money. The 30-year Fixed-Rate Mortgage, the most popular and easiest to qualify for, will give you the lowest payment. But you can also get a 20-, 15- and even a 10-year fixed-rate mortgage if you wish to save interest and pay your home off sooner.
A Fixed-rate mortgage is a loan that has the interest rate and payment set for the life of the loan. The benefit is that you always know what your principal and interest costs are, which takes out the guesswork when planning. For answers to specific questions or concerns, contact us at 1-800-403-3595.
