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.
