A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.
There is a misconception by the general public. They seem to think that fixed rate is always the best way to go. This is not true because everyone's situation is different. If you were only going to be in a home for 3-5 years then it would cost you more money for the fixed vs. an Adjustable Rate Mortgage (ARM).
Although Fixed Rate Mortgages (FRM) may not be financially right for some homeowners, FRM's nonetheless offer the ease of mind of fixed payments for the life of the loan. For those who plan to move or refinance within a few years, an Adjustable Rate Mortgage or a Hybrid Mortgage is usually the answer, especially in a high-interest environment. For homeowners who are not comfortable with the uncertainty of their future mortgage payments, the psychological and mental benefits of knowing the exact monthly mortgage payment for the entire loan term may outweigh the higher starting rate of a FRM.
The rates for fixed rate mortgages change based on the term you choose. Typically 40 year mortgages have the highest rates, followed by 30 year fixed, 25 year fixed, 20 year fixed, 15 year fixed and 10 year fixed.
If you are planning to use the equity in your home to pay for future like remodeling, college tuition, etc., you way want to think twice about locking in a fixed rate for the next 30 years. There is no reason to pay more than you have to today to guarantee a fixed rate 15 years from now that you won't be able to benefit from.
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