What is a Fixed Mortgage Rate?

A Fixed Rate Mortgage (FRM) is the most popular mortgage loan type due to its simplicity and stability. A FRM has a set interest rate that is "fixed" for the entire loan term, meaning that the monthly mortgage payment is the same every month. Most FRM loan terms are 30-years; however, you may choose a shorter term at a lower interest rate.

Benefits of a Fixed Rate Mortgage include:

• Predictability: Since your mortgage payment remains the same every month, FRMs are great for homeowners who want to budget their expenses and financially plan for the future.
• Protection Against Inflation: Since the mortgage rate is fixed, your mortgage payment will never go up, even if market interest rates increase.

Disadvantages of a Fixed Rate Mortgage include:

• Higher Interest Rate: Stability comes at a price: Fixed Rate Mortgages usually have a higher interest rate than other types of loans.
• Limited Buying Power: With a higher interest rate, your buying power may decrease (you may not be able to qualify for a larger loan).

Who Should Consider a FRM?
Lenders generally recommend a Fixed Rate Mortgage to homeowners planning to remain in their home for at least 7-10 years, or for borrowers who are able to lock in a low interest rate.