What is a fixed rate mortgage?
With a Fixed Rate Mortgage your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very 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.
This is the most common 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 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 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.
This is the most common 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 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 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.
