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Fixed Rate Mortgages (available from 10 years to
30 years). Monthly payments are fixed over the life of
the loan, with an interest rate that does not change:
meaning you're protected if rates go up. If rates go
down, you can decide to refinance your loan. However,
Fixed Rate Mortgages have a higher interest rate than
Adjustable Rate Mortgages, and the rate does not drop if
interest rates improve. In a FRM, the interest
rate, and hence monthly payment, remains fixed for the
life (or term) of the loan. In the U.S., the term is
usually for 10, 15, 20, or 30 years. The only increase a
consumer might see in their monthly payments would
result from an increase in their property taxes or
insurance rates (paid using an escrow account, if
they've opted to use an escrow). But payments for
principal and interest will be consistent throughout the
life of the loan using an FRM. |
