What Is Fixed-Rate Mortgage?
Fixed-Rate Mortgage: A loan whose interest rate and principal-and-interest payment stay the same for the entire term.
A fixed-rate mortgage keeps the same interest rate for the life of the loan. Your principal and interest payment never changes.
Common terms
- 30-year fixed: the lowest monthly payment, the most total interest
- 15-year fixed: a higher payment, a lower rate and far less total interest
- 20- and 25-year options, for something in between
Example
On a $350,000 loan, a 30-year fixed at 6.75% has a principal and interest payment of about $2,270. A 15-year fixed at 6.0% is about $2,955, but saves over $280,000 in interest over the life of the loan.
Good to know
Your total payment can still change, because property taxes and insurance in your escrow account can rise. If rates fall, you can refinance to a lower rate.