Information Center, Loan Types
Fixed Rate Home Loan
October 9, 2008 by Mortgage Align · Leave a Comment
Fixed-rate mortgages allow for repayment of a debt in equal monthly mortgage payments over a specified period of time, from 10 to 50 years. A 30-year amortization period is typically most common.
- Payments are credited first to interest, then to principal, so the beginning of your loan period the majority of the payment goes toward interest.
- Toward the end of the loan period, much of the monthly payment goes toward principal.
The Benefits of Fixed-Rate Loans
Some borrowers prefer fixed-rate mortgages because they like the peace of mind in knowing exactly how much they will pay per month for principal and interest.
- The interest rate is fixed, so if overall interest rates increase, it does not affect the fixed-rate borrower.
- If interest rates increase, the borrower can refinance the mortgage into a lower rate.
