Fixed Rate Mortgages
The most common type of mortgage program where your monthly payments
for interest and principal never change. Property taxes and
homeowners insurance may increase, but generally your monthly
payments will be very stable.
Fixed-rate mortgages are available for
30 years, 20 years, 15 years and even 10 years. There are
also "bi-weekly" mortgages,
which shorten the loan by calling for half the monthly payment
every two weeks. (Since there are 52 weeks in a year, you make
26 payments, or 13 "months" worth, every year.)
Fixed rate fully amortizing loans have two distinct features.
First, the interest rate remains fixed for the life of the
loan. Secondly, the payments remain level for the life of the
loan and are structured to repay the loan at the end of the
loan term. The most common fixed rate loans are 15 year and
30 year mortgages.
During the early amortization period, a large percentage of
the monthly payment is used for paying the interest . As the
loan is paid down, more of the monthly payment is applied to
principal . A typical 30 year fixed rate mortgage takes 22.5
years of level payments to pay half of the original loan amount.
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