Fixed-rate mortgages are the most common type of mortgage selected by homeowners today. With a fixed-rate, you are locked in to a set interest rate. This means your monthly mortgage payments will remain the same for the entire life of the loan, whether 15, 20, or 30 years.
Types of Fixed-Rate Mortgages:
- 30-year Term – With this, your monthly payment will be lower due to the extended period of the loan, but your interest rate is typically higher and you pay more interest over time.
- 15-year Term – With this, you have a higher monthly payment because the loan term is significantly shorter; however, you can build equity much faster than with a 30-year fixed rate mortgage and pay less interest over the life of the loan with a lower rate.
Fixed-Rate Mortgage Benefits:
- The major benefit is that your mortgage payment will never change. If interest rates rise, rest assured that your mortgage payments will not.
- Fixed mortgage borrowers don’t necessarily need to worry too much about what is happening in the market, though it’s wise to monitor interest rates in the event a significant drop makes it favorable to consider refinancing.
- This is generally a stress-free loan choice and one favored by government programs for their stability.