The most popular type of mortgage program where your
monthly payments for interest and principal never
increase or decrease.
Fixed-rate mortgages are available for any term up
to 30 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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