A Fixed Rate Mortgage ExplainedWatch the Video
What is a Fixed Rate Mortgage?
A Fixed Rate Mortgage features principal and interest payments that remain constant throughout the life of the home loan. The interest rate and other terms are fixed and do not change. The shorter the term, the faster the loan can be paid in full, with slightly higher monthly mortgage payments. In contrast, the longer the term, the longer it will take to pay your loan off in full with lower monthly mortgage payments.
Pros & Cons
Fixed-Rate Mortgage Pros
- Consistent interest rate and monthly payments
- Payments may change based on escrow changes for property taxes and insurance
- Choice of term options, including 10, 15, 20, 25, and 30-year options
- A good choice for people who will own their home long-term
- A good choice for people who want to minimize risk of increasing interest rates
Fixed-Rate Mortgage Cons
- May not be a good choice when expected time of home ownership is short
Higher rate compared to Adjustable Rate Mortgage, because the lender guarantees the rate longer
- May not be a good choice for clients with a tolerance for risk, who believe rates will be lower in the future
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