Fixed
Rate Mortgages
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 "bi-weekly" 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.