As the name implies, fixed-rate mortgages are a form of home loan in which the rate is fixed for the entire duration. Essentially, this means that the interest rate on the mortgage will remain consistent throughout the lifetime of the loan. Some borrowers prefer fixed-rate mortgages as the monthly payment amount is predictable and the same every month. Fixed-rate mortgages and adjustable-rate mortgages are the most common forms of home loans.
Common terms for fixed-rate mortgages tend to range between 10 to 30-year durations. The most common is a 30-year mortgage, followed by 15 years.
There are certain benefits and disadvantages to fixed-rate mortgages. This includes consistent and predictable payments which should make budgeting easier. Another benefit is that the loan amortizes over the period of the mortgage.
One of the drawbacks is that borrowers may pay more initially in the early stages of the loan. This is due to slightly higher interest rates when compared to adjustable-rate mortgages.
Fixed-rate mortgages may be more suitable for long-term real estate investors.