This traditional type of loan maintains its original interest rate throughout the life of the loan. (Any change in monthly loan payments will be due to increases in other charges like insurance or taxes that will naturally occur over time.) Fluctuations in market rates, over the term of your loan, won't affect the amount of interest you pay because that rate is already "fixed."
A fixed rate mortgage loan may be a good choice if you:
- Want the security of knowing your:
- Interest rate will not change.
- Required monthly mortgage loan payment will not change.
- Plan to stay in this home for several years.
- Don't expect your income to increase significantly in the coming years.
Fixed rate mortgage loans come in various loan terms. In determining the length of your loan, you may want to consider:
- Total amount of interest you want to pay over the course of your loan. For example:
- 30-year loan: The total cost, in terms of interest paid on the loan, is higher than the total cost of a shorter term loan. You also have the advantage of lower monthly payments due to the longer loan term.
- 15-year loan: You have the advantage of repaying the loan more quickly with higher monthly loan payments and building equity more quickly.
- Your ability to make higher monthly payments:
- If you can afford to pay more per month, you can reduce the number of months you have to pay.
- Choosing a shorter term will also save you thousands of dollars in interest charges vs. the typical longer term loan.
Looking for other ways to decrease the amount of interest you pay? Consider a longer term loan so you don't lock yourself into higher monthly payments, but pay a little extra each month toward the principal when you are able to do so.
For Rates, Assumptions and full disclosures visit our Daily Rate Page.
10 Year Fixed Rate No PMI
Best Choice If:
- You would like to pay off the loan balance more quickly than a longer term mortgage.
- You want your monthly payments to remain fixed over the life of the loan.
- You think interest rates could rise in the next few years and want to maintain the current interest rate over the life of the loan.
| Advantages:
- Level payments for the full term of the loan.
- Mortgage Insurance is not required.
- No risk that a changing interest rate environment will increase your monthly payments.
- An excellent option for debt reduction and equity building.
- You will pay less interest over the life of the loan than you would on a longer term mortgage for the same amount.
| Disadvantages:
- Monthly payments are higher than a longer term mortgage for the same amount.
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10 Year Fixed Rate
Best Choice If:
- You would like to pay off the loan balance more quickly than a longer term mortgage.
- You want your monthly payments to remain fixed over the life of the loan.
- You think interest rates could rise in the next few years and want to maintain the current interest rate over the life of the loan.
| Advantages:
- Level payments for the full term of the loan.
- No risk that a changing interest rate environment will increase your monthly payments.
- You will build equity more quickly than a longer term mortgage for the same amount.
- You will pay less interest over the life of the loan than you would on a longer term mortgage for the same amount.
| Disadvantages:
- Monthly payments are higher than a longer term mortgage for the same amount.
|
15 Year Fixed Rate (Freddie Mac)
Best Choice If:
- You would like to pay off the loan balance more quickly than a longer term mortgage.
- You want your monthly payments to remain fixed over the life of the loan.
- You think interest rates could rise in the next few years and want to maintain the current interest rate over the life of the loan.
| Advantages:
- Level payments for the full term of the loan.
- No risk that a changing interest rate environment will increase your monthly payments.
- You will build equity more quickly than a longer term mortgage for the same amount.
- You will pay less interest over the life of the loan than you would on a longer term mortgage for the same amount.
| Disadvantages:
- Monthly payments are higher than a longer term mortgage for the same amount.
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20 Year Fixed Rate (Freddie Mac)
Best Choice If:
- You would like to pay off the loan balance more quickly than a longer term mortgage.
- You plan on staying in the home long term.
- You want your monthly payments to remain fixed over the life of the loan.
- You want your monthly payments to be lower than they would be on a shorter term mortgage for the same amount.
- You think interest rates could rise in the next few years and want to maintain the current interest rate over the life of the loan.
| Advantages:
- Level payments for the full term of the loan.
- Monthly payments will be lower than a shorter term mortgage for the same amount.
- No risk that a changing interest rate environment will increase your monthly payments.
| Disadvantages:
- Monthly payments are higher than a 30 year mortgage for the same amount.
- You will pay more interest over the life of the loan than you would on a shorter term mortgage for the same amount.
- You will build equity more slowly than you would with a shorter term mortgage for the same amount.
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30 Year Fixed Rate (Freddie Mac)
Best Choice If:
- You plan on staying in the home long term.
- You want your monthly payments to remain fixed over the life of the loan.
- You want your monthly payments to be lower than they would be on a shorter term mortgage for the same amount.
- You think interest rates could rise in the next few years and want to maintain the current interest rate over the life of the loan.
| Advantages:
- Level payments for the full term of the loan.
- Monthly payments will be lower than a shorter term mortgage for the same amount.
- No risk that a changing interest rate environment will increase your monthly payments.
| Disadvantages:
- You will pay more interest over the life of the loan than you would on a shorter term mortgage for the same amount.
- You will build equity more slowly than you would with a shorter term mortgage for the same amount.
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