Fixed Rate Mortgage ProgramA fixed rate mortgage is the most common type of loan, and is the one that most people are familiar with. In a fixed rate mortgage loan, the monthly payment, (made up of a combination of principle and interest), never changes during the lifetime of the loan. A fixed rate mortgage can come with a number of terms, from 10 to 30 years, and generally can be paid off at any time. Fixed rate mortgages are structured or "amortized" so that by the end of whatever loan term is selected, the entire loan will be paid off. A Bi-Weekly Mortgage shortens the loan term by requiring half the monthly payment every two weeks. Because there are 52 weeks in a year, you make a total of 26 payments, or 13 months' worth, ever year. Having a fixed rate mortgage does not guarantee that your monthly payment will always be the same. If you have an "impound account", your monthly payment may vary. Aside from the monthly loan payment, a lender will collect additional fees every month, (from those that put less than 20% down on their home), for the prorated monthly cost of property taxes and homeowners insurance. The additional money is placed in an impound account by the lender, who uses it to pay the borrowers' property taxes and insurance. If either of these items happen to change, the borrower's monthly payment will be changed to accomodate the new amounts. Overall, compared to other loan products, the payments in a fixed rate mortgage are very stable and predictable. |
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