A fixed-rate mortgage is a home loan with a fixed interest rate for the entire term of the loan. This means your monthly payments remain the same throughout the life of the loan, providing stability and predictability.
- Fixed Interest Rate: Your interest rate won't change.
- Consistent Payments: Your monthly mortgage payment remains the same.
- Pros: Predictable payments, protection against interest rate increases.
- Cons: Potentially higher initial rates compared to adjustable-rate mortgages.
Fixed-rate mortgages are often compared to adjustable-rate mortgages (ARMs), which have variable interest rates that can change over time.
Ideal for borrowers who plan to stay in their home long-term and want stable, predictable payments.
Monthly Payment = Principal Amount + Interest + Taxes + Insurance (if applicable).
A 30-year fixed-rate mortgage of $200,000 at 4% interest would have a monthly principal and interest payment of approximately $955.
Fixed-rate mortgages are popular when interest rates are low and expected to rise in the future.
Shop around for the best rates, consider locking in a rate if you expect rates to increase.
