Fixed Rate Mortgage
Fixed Rate Mortgage (FRM) - "What is a fixed rate mortgage (FRM)? Should I get one?"
Fixed rate mortgages is a mortgage loan that has a permanent interest rate that will not change for the life of the loan. This is only one type of mortgage and your mortgage professional can help you decide if they mortgage will fit your financial status.
If a fixed rate mortgage isn't right for you, there are several adjustable rate mortgages available that can work better for some customers in the short term.
One reason that you may choose an adjustable rate mortgage as opposed to a fixed rate mortgage is the length of time you plan on residing in your home. If you know you are planning on staying for a short period of time, it may be wise to take advantage of the lower initial rate.
The most common type of mortgage program where your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable.
Fixed rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. There are also "biweekly" mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every year.)
Fixed rate fully amortizing loans have two distinct features. First, the interest rate remains fixed for the life of the loan. Secondly, the payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term. The most common fixed rate loans are 15 year and 30 year mortgages.
During the early amortization period, a large percentage of the monthly payment is used for paying the interest . As the loan is paid down, more of the monthly payment is applied to principal . A typical 30 year fixed rate mortgage takes 22.5 years of level payments to pay half of the original loan amount.
Mortgage Interest Rates 30 Year Fixed Refinance - Mortgage interest rates on a 30 year fixed refinance are usually slightly higher than the interest rates on mortgages with shorter terms.
It is always a good idea to ask your loan officer what options you have. Depending on the situation, a 30 year fixed mortgage may not be your best option. Because the interest rate will generally be slightly higher on a fixed mortgage compared to an adjustable rate mortgage, the payment will also be higher. Talk it over with your mortgage professional. He or she should lay the options out for you, and together you can decide whether a fixed rate or an adjustable rate will be your better choice.
A 30-year fixed loan means the payments are amortized over a 30-year period.
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Information listed above is to be used for educational purposes only and is not guaranteed