The term "fixed rate mortgage" refers to a home loan that has a fixed interest rate for the life of the loan. This means that the mortgage has a constant interest rate from start to finish. Fixed rate mortgages are popular with consumers who want to know how much they will pay each month.
A fixed rate mortgage is a home loan option with a fixed interest rate for the life of the loan. Basically, the mortgage interest rate does not change over the life of the loan and the borrower's interest and principal payments remain the same each month.
Several kinds of mortgage products are available on the market, but they boil down to two basic categories: variable-rate loans and fixed-rate loans. With variable-rate loans, the interest rate is set above a certain benchmark and then fluctuates—changing at certain periods.
Fixed-rate mortgages, on the other hand, carry the same interest rate throughout the entire length of the loan. Unlike variable- and adjustable-rate mortgages, fixed-rate mortgages don’t fluctuate with the market. So the interest rate in a fixed-rate mortgage stays the same regardless of where interest rates go—up or down.
Mortgage term is essentially the term of the loan, i.e. the period over which it must be repaid.
In the United States, fixed rate mortgages can have terms ranging from 10 to 30 years. 10 years, 15 years, 20 years, 30 years are typical increments. Of all the term options, 30 years is the most popular, followed by 15 years.
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