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Fixed rate mortgage

The fixed rate mortgage is a mortgage where the interest rate always remains the same during the entire loan period, as a contrast to an adjustable rate loan.

 

In the United States the fixed rate mortgage is the classic and most common type of mortgage for homes. 15 years and 30 years are the most common loan terms, but of course this isn't the only options for you these day. You may choose a longer or shorter loan term if you think that will serve you better.

 

The cons with a fixed rate mortgage are that the starting interest normally is higher that it would have been for an adjustable rate mortgage.

 

The other negative thing about the fixed rate may in some cases also be a positive aspect. The interest rate is fixed as previously stated and this means that your interest will not be effected by the general changes on the market. Over a longer period the general interest will probably go up and down quite alot and if the rates go down you will as a result have to pay more than you would have if you had chosen the adjustable rate instead. But on the other hand you will be able to save money if the rates go up since you are not effected by these changes and will always pay the rate you determinded back when getting your loan.