A fixed rate mortgage is the most common type of mortgage program obtained by consumers who are looking for a mortgage where your monthly payments of interest and principal do not change at all. There can be increases in property taxes and homeowners insurance but in most situations the monthly payments will be very stable. A fixed rate mortgage has the same payment for the entire term of the loan. Using our calculator to compare a fixed rate mortgages is a good way to get a fast idea of what options you may have in getting a fixed rate mortgage to assist in your financial situation.
Fixed rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. It is sometimes possible to obtain a “biweekly” mortgage. In this case you are able to shorten the loan by paying half the monthly payment every two weeks.
Fixed rate mortgage loans have two prominent characteristics. The interest rate remains fixed for the life of the loan and the payments remain level for the life of the loan. The mortgage is structured to have the loan repaid by the end of the loan term. The most common fixed rate loan are15 year and 30 year mortgages however there are many other options.
At first the biggest part of the monthly payment is used for paying the interest. Interest is the money that you pay to the lender for the privilege of borrowing their money. As the loan gets paid off more and 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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