Fixed Rate Mortgage

With a fixed rate mortgage, the interest rate does not change for the term of the loan; the monthly principal and interest payment stays the same. Typically, the shorter the loan period, the more attractive the interest rate will be.
Payments on fixed-rate fully amortizing loans are calculated so that the loan is paid in full at the end of the term. In the early amortization period of the mortgage, a large percentage of the monthly payment pays the interest on the loan. As the mortgage is paid down, more of the monthly payment is applied toward the principal.
A longer term fixed rate mortgage is the most popular type of loan when borrowers are able to lock into a low rate.
Benefits:
·         Lower monthly payments than a shorter fixed rate mortgage
·         Interest rate does not go up
·         Principal and interest payment does not go up
Drawbacks:
·         Higher interest rate than a shorter fixed rate mortgage
·         Interest rate stays the same even if interest rates go down
A shorter term fixed rate mortgage allows you to pay off your loan quicker and lock into an attractive lower interest rate.
Benefits:
·         Lower interest rate
·         Build equity faster
·         Interest rate does not go up
Drawbacks:
·         Higher monthly payment
·         Interest rate stays the same even if interest rates go down