Fixed Rate Mortgage

With a fixed-rate mortgage, the interest rate on the note remains the same throughout the loan term. Typically, the shorter the loan period, the more attractive the interest rate will be.

Payments on fixed-rate fully amortizing loans are calculated so that the loan is paid in full at the end of the term. In the early amortization period of the mortgage, a large percentage of the monthly payment pays the interest on the loan. As the mortgage is paid, more monthly payments are applied toward the principal.

A 30-year fixed-rate mortgage is the most popular type of loan when borrowers can lock into a low rate.

Benefits:

·         Lower monthly payments than a 15-year fixed-rate mortgage

·         Interest rate does not change

Drawbacks:

·         Higher interest rate than a 15-year fixed-rate mortgage

·         Interest rate stays the same even if interest rates go down

A 15-year fixed-rate mortgage allows you to pay off your loan quicker and lock into an attractive lower interest rate.

Benefits:

·         Lower interest rate

·         Build equity faster

·         Interest rate does not change

Drawbacks:

·         Higher monthly payment stays the same if interest rates go down

·         Interest rate stays the same even if interest rates go down