Key elements of fixed-rate mortgages:
- The monthly principal and interest payment will not change over the life of the loan
- The interest rate will not change, even if market rates go up
- Knowing monthly mortgage expense in advance makes household budgeting easier
Common fixed-rate mortgages:
30-Year Fixed: These loans allow homebuyers to borrow more money for the same monthly payment than do shorter-term loans. They may also make possible a lower down payment, because the down payment has less impact over the full life of the loan.
15-Year Fixed: These loans generally require a higher monthly payment and down payment than their 30-year counterparts, and may be better suited for lower-priced homes. Since the term of the loan is half as long, the borrower gains significant savings on the total amount of interest paid on the loan.