FULLY AMORTIZED MORTGAGE LOAN
Fixed-Rate Mortgage
The interest rate and payment remain the same for the duration of the loan.
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Interest & Equity
In general, the longer the term of the fixed-rate mortgage, the more interest you will pay over the life of the loan. Longer terms usually come with higher interest rates but lower monthly payments.
The shorter the repayment term is, the lower the interest rate will be and the faster you will pay off and build equity in your home, but your monthly payments will generally be higher.
15-year and 30-year fixed-rate mortgages are the most common, although other terms are available (from 10 to 50 years).
FIXED-RATE MORTGAGE
Advantages
- Rates and payments remain constant
- Loan is paid off in full at end of term
- Ability to budget based on a fixed cost
- Loan will not adjust upward with the market (even if rates hit 20%)
- Simple to understand
- Great option for first-time home buyers
FIXED-RATE MORTGAGE
Disadvantages
- Usually more expensive than adjustable-rate mortgages (ARMs)
- Rate will not adjust downward with the market (even if rates hit 1%)
- You must refinance to take advantage of lower rates
