| FIXED RATE MORTGAGE |
What Is A Fixed Rate Mortgage |
A fixed rate mortgage is the most common mortgage today. Fixed rate mortgage terms are generally 30 year, 25 year, 20 year, 15 year or 10 year. Although not common until recently, the 40 year mortgage product has become more common. A fixed rate mortgage is simply a mortgage where the rate stays fixed over the entire time period of the loan. It is more beneficial to utilize a fixed rate mortgage when rates are low. When rates are high it may make sense to utilize an adjustable rate mortgage. An mortgage is called an amortized loan. An amortized loan is calculated so that the principal and interest will be paid off in their entirety by the end of the term. However, the interest is loaded more to the front than at the end of the loan. For example a mortgage payment of $1200 may pay $1150 of interest and $50 against principal at the first payment and $1150 of principal and $50 of interest at the last payment. A fixed rate mortgage also allows inflation to make the payment easier to handle as time goes on. As time passes, pay increases, money has more value, but the payment stays the same. A fixed rate mortgage also allows for management in early payoffs. For example, by making one additional payment per year you can reduce the payments by almost one third. We look forward to serving you.
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