Fixed Rate Home Loans

The most common fixed rate mortgages are for a term of fifteen or thirty years.  These mortgage loans are simply loans with a fixed interest rate amortized over the term of the loan so neither the payment nor the rate change at anytime during the life of the loan.  These loans were at one time the only mortgage loans available to borrowers.  Recently lenders have added 40 year and even 50 year amortization periods to reduce the monthly payment.  Because the average life of a residential mortgage is less than five years in America, having a thirty year mortgage may sometimes be unnecessarily expensive.  However, if you intend to stay in your home for a long time this may be the best loan for you.

A fixed rate mortgage loan can have an interest only option for up to ten years, for a lower initial payment.  The rate remains fixed for the entire term of the loan.  The payment changes once the interest only period is over in order to pay off the loan over the remaining period of time.  Ten years ago, perhaps 90% of residential mortgage loans were a fixed rate program.  In today’s increasing expensive real estate market many borrowers are opting for a lower monthly payment by exercising other mortgage loan options.