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.
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