With a
fixed-rate
or conventional mortgage, the
interest rate
remains the same for
the whole term. The total interest and monthly payments are set
at the closing. You repay the principal and interest in equal,
usually monthly, installments over a 15-, 20-, or 30-year period.
You’ll know right from the start how much you’ll pay,
so you can plan your budget more easily. And, if interest rates
increase, you’re safely locked in at the lower rate.
Fixed-rate mortgages are the most common,
most widely available type of mortgage. But, they may not be the
best choice for everyone. The major disadvantage of fixed-rate
mortgages is that you won’t benefit if interest rates drop.
In that case, you’d have to
refinance
to get the lower rates.
In addition, fixed-rate mortgages often have slightly higher initial
rates than adjustable-rate mortgages. That means you might need
a higher income to qualify.
