Fixed Rate
Mortgage
The most common type of mortgage program
where 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 40 years, 30 years, 20 years, 15 years
and even 10 years.
There are also "biweekly" 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.) Most lenders
set you up with a monthly payment at the loan closing. Then,
offer you the biweekly option shortly after you have proven
a timely payment history.
Fixed rate fully amortizing loans have
two distinct features. First, the interest rate remains fixed
for the life of the loan. Secondly, the payments remain level
for the life of the loan and are structured to repay the
loan at the end of the loan term. The most common fixed rate
loans are 15 year and 30 year mortgages.
During the early amortization period,
a large percentage of the monthly payment is used for paying
the interest . As the loan is paid down, more of the monthly
payment is applied to principal . A typical 30 year fixed
rate mortgage takes 22.5 years of level payments to pay half
of the original loan amount.
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What’s
the best program for me?
 There
isn't a single or simple answer to this question.
The right type of mortgage for you depends on many
different factors:
- Your current financial picture.
- How you expect your finances to change.
- How long you intend to keep your house.
- How comfortable you are with your mortgage payment changing.
- For example, a 15-year fixed rate mortgage can save you many thousands
of dollars in interest payments over the life of the loan, but your monthly
payments will be higher. An adjustable rate mortgage may get you started
with a lower monthly payment than a fixed rate mortgage -- but your payments
could get higher when the interest rate changes.
The best way to
find the "right" answer is to discuss your
finances, your plans and financial prospects, and
your preferences frankly with a mortgage professional.
Click
here to request a quote on a fixed rate mortgage!
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