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Fixed-rate Mortgages

 What You'll Learn

  • Fixed-rate mortgages can provide you with affordability, stability and flexibility
  • Nearly 90% of today’s homebuyers choose the 30-year fixed-rate mortgage
  • Fixed-rate mortgages with 15-year terms will have higher monthly payments, but you’ll build equity much faster

Fixed-rate mortgages are the most common type of mortgage selected by homeowners today. With a fixed-rate mortgage, your interest rate will be locked in for the life of the loan. This means that your monthly mortgage payments will remain the same for the entire term of the loan, whether it's a 15-, 20- or 30-year mortgage.

The primary benefit of fixed-rate mortgages is inflation protection – meaning that if mortgage rates increase in the future, your mortgage rate will not change.

Things you may want to consider with a fixed-rate mortgage:

  • Your interest rate won't change if rates increase or go down. Your rate is locked in and will remain the same for the duration of your term – good news if rates go up. If rates go down enough you can consider refinancing your mortgage if it makes financial sense to do so.
  • Your payment can increase based on changes to your taxes and insurance. Your mortgage payment is comprised of principal, interest, taxes and insurance. While your principal and interest payment (typically the bulk of the payment) will not change over the life of your loan, your taxes and insurance may increase, resulting in changes to your monthly payment.
The 30-year fixed-rate mortgage is the product of choice for nearly 90% of today’s homebuyers. The reasons are simple: affordability, stability, and flexibility.

When selecting the term of a fixed-rate mortgage, it is important to understand the features and benefits of each. Most mortgage lenders offer at least two basic terms: 15 and 30 years. Many also offer 20-year fixed-rate mortgages.

  • 30-Year Term. With this term, your monthly payment will be lower due to the extended period of the loan. Interest rates are typically higher and you pay more interest over time.
  • 15-Year Term. This term has higher monthly payments because the loan term is significantly shorter. However, you can build equity much faster than with a 30-year fixed-rate mortgage, and pay less interest over the life of your loan. Interest rates are typically lower for this term.
Did You Know the interest rate for a 30-year fixed mortgage hit a record high of 18.63% in 1981? This is more than 15 percentage points higher than its all-time low of 3.31% in 2012.

To determine the best term for your personal situation and one that aligns with your financial goals, talk with your lender or financial professional for guidance.

  Key Takeaways

  1. With a 30-year fixed-rate mortgage, your interest rate is locked in for 30 years, providing long-term financial security

  2. Most of America’s homebuyers choose the 30-year fixed-rate mortgage

  3. If you have a fixed-rate mortgage and rates drop, your rate will not change unless you consider refinancing

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