Fixed Rate Mortgage Loans

Definition

A fixed rate mortgage loan is a mortgage loan that has a fixed interest rate for the entire life of the loan. Since a fixed rate mortgage loan has a fixed interest rate that can't change, the principal and interest payment of a fixed rate mortgage loan also stays fixed for the life of the loan.

This means that if you took out a 30 year fixed rate mortgage loan and paid it off over a period of 30 years, then your last principal and interest payment would be for the same amount and at the same interest rate as your first payment.

Note: The total monthly payment for a home includes the principal and interest payment for the mortgage loan, as well as the taxes and insurance payment for the home. While the principal and interest payment stays the same for a fixed rate mortgage loan, taxes and insurance can change and affect the overall monthly payment.

Key Points

  • A fixed rate mortgage loan has a fixed interest rate for the life of the loan.

  • A fixed rate mortgage loan also has a fixed principal and interest payment.

  • The 30 year fixed rate mortgage loan that is paid off over a period of 30 years is the most common fixed rate mortgage loan.

  • Fixed rate mortgage loans are also available that take 20, 15 or 10 years to pay off. Fixed rate mortgage loans that take a shorter period of time to pay off have a higher monthly payment than fixed rate mortgage loans that take a longer period to pay off. The advantages of these shorter fixed rate mortgage loans are that you pay them off faster, and you pay much less total interest to the mortgage lender.

    Note: In addition to standard fixed rate mortgage programs, there are many fixed rate mortgage programs for unique situations. For instance, there are fixed rate mortgage programs for first time homebuyers, fixed rate mortgage programs that don't require a down payment, fixed rate mortgage programs for bad credit, etc. For more information, go to the Loan Programs main page and click one of the items in the Loan Types list.

Pros

  • There is no way the interest rate can go up during the life of a fixed rate mortgage loan.

  • There is no way the monthly principal and interest payment can go up during the life of a fixed rate mortgage loan.

  • Because you do not need to worry about the interest rate or monthly payment going up, there is a lot of security in going with a fixed rate mortgage loan. This is the reason why the fixed rate mortgage loan is the most popular mortgage loan today and has been the most popular mortgage loan for decades.

Cons

  • The interest rate of a fixed rate mortgage loan is higher than the interest rate of a comparable adjustable rate mortgage (or ARM).

  • The monthly principal and interest payment of a fixed rate mortgage loan is also higher than the monthly principal and interest payment of a comparable ARM.

  • Although there is no possibility of the interest rate and monthly principal and interest payment going up, there is also no possibility of them going down if national interest rates become lower than they were when the fixed rate mortgage loan was first issued.

Summary

Fixed rate mortgage loans keep the same interest rate and monthly principal and interest payment for the life of the loan. They are normally available with payment periods of 10, 15, 20 and 30 years, with the 30 year fixed rate mortgage being the most popular mortgage loan of all. The stability and security of fixed rate mortgage loans is what keeps them so popular.

Fixed rate mortgage loans have higher interest rates and monthly payments than corresponding ARMS, though many people feel this is offset by the security inherent in a fixed rate mortgage loan. Finally, fixed rate mortgage loans are available for many unique situations: there are fixed rate mortgage loans for first time home buyers, fixed rate mortgage loans for bad credit, fixed rate mortgage loans that don't require a down payment, etc.

If you're interested in applying for a fixed rate mortgage loan with Arizona Mortgage Group, simply complete our Quick Application. One of our loan originators will then call you within 1 business day to answer any questions you have and get you started.

Calculators

Mortgage Calculator
Our mortgage calculator can calculate principal and interest payments, calculate total monthly payments and display an amortization report.

Refinance Calculator
Our refinance calculator can calculate whether it would save you money to refinance your existing mortgage loan (s).

Local Information

We specialize in loans for borrowers in the greater Phoenix metropolitan area. Click a link below for more information about a particular town:

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