Fixed-Rate Loans
HOW IT WORKS
Monthly payments are based on the interest rate, principal loan amount, and amortized interest over a period of time (typically, 15 or 30 years).
With a Fixed Rate Mortgage, your interest rate and monthly payments will never change, even if market rates increase.
The payment will vary based on your situation and the current interest rates when you apply.
You can choose to pay your mortgage off at any time without pre-payment penalties.
FIXED-RATE LOAN TERMS
Thirty-Year Fixed Rate Mortgage
With a 30-year fixed-rate mortgage, your principal and interest payments don't change. If you plan on staying in your home for seven years or longer, this may be a good choice for you. If you plan to move within seven years, then an adjustable-rate loan may be cheaper.
As a rule of thumb, it may be harder to qualify for a fixed-rate loan than an adjustable-rate loan. However, when interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run since you can lock in the rate for the life of your loan.
Fifteen-Year Fixed Rate Mortgage
This loan is fully amortized over a 15-year period and also features fixed monthly payments for the term of the loan. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment since the difference in interest rates isn't that great.
