Fixed Rate Mortgage

Posted In: Mortgage Basics

A fixed rate mortgage, also known as a FRM, is a popular mortgage vehicle that ties the borrower into a fixed interest rate over the life of the mortgage. Fixed rate mortgages are usually 30 years in length, although variants include 15, 20, 40 or even 50 year lengths.

Advantages and Risks

The overwhelming reason for the popularity of fixed rate mortgages is financial stability. Homeowners with a fixed rate mortgage typically see a minimal, if any, increase in their monthly mortgage payments. Any increases tend to arise from property tax or homeowner's insurance rate rises. But the core mortgage payment will not change. And thanks to the mortgage principal being amortized for the duration of the loan, at the end of the fixed rate mortgage's life the homeowner owns their property outright.

But fixed rate mortgages aren't for everyone. They often require a higher monthly payment because of the financial stability they bring. And homeowners who only intend on living in their home for several years might end up paying more than they need before they move on to a new property. Furthermore, if you obtain a fixed rate mortgage while interest rates are comparatively high, you must refinance to lock in a lower interest rate and clinch lower monthly payments.

Getting a Fixed Rate Mortgage

If you're interested in obtaining a fixed rate mortgage, consider the free, no obligation service provided by America's Lending Partners. ALP can match you with up to four trusted lenders. You can then evaluate their fixed rate mortgage offers and choose the one that's right for you.

If you're unsure whether a fixed rate mortgage is right for you, speak to one of ALP's experienced mortgage planners, who can help to evaluate your situation and provide you with a no obligation mortgage plan.