Mortgage Dictionary

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Fixed Rate Mortgage

With a fixed-rate mortgage, the monthly principal and interest payments are constant throughout the life of the loan.

When considering fixed-rate loans of different duration, the borrower makes a tradeoff between interest cost and monthly payment. For example, you can make smaller monthly payments with a 30-year than with a 15-year fixed rate. However, you can repay the 15 year loan twice as fast and save more than half the total interest costs.

See also:   Fixed-Rate Mortgage | Adjustable-Rate Mortgage (ARM)