Fixed Rate
A fixed-rate mortgage (FRM) is a type of home loan where the interest rate remains constant throughout the entire term of the loan. This ensures that the monthly payments for principal and interest stay predictable over time, making it a popular choice for borrowers seeking financial stability and long-term budgeting.
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: The interest rate does not change, regardless of market fluctuations, providing consistent monthly payments.
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: Common terms include 10, 15, 20, and 30 years, with 30 years being the most popular.
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: Early payments primarily go toward interest, while later payments contribute more to the principal due to amortization.
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: Monthly payments typically include principal, interest, property taxes, and homeowners insurance. However, only the principal and interest portions remain constant.
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Predictable payments make it easier to budget.
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Protection from rising interest rates over time.
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Fixed-rate mortgages usually have higher initial interest rates compared to adjustable-rate mortgages (ARMs)
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Borrowers might miss out on potential savings if market rates decrease.
This type of mortgage is ideal for individuals planning to stay in their home long-term or those who prefer financial predictability over potential market-based savings.
