How do fixed rate mortgages work

Compared to a year mortgage of the same amount, a year loan has higher monthly payments, but lower interest charges over the life of the loan. A year loan usually has a lower interest rate. Depending on the lender, you might also encounter fixed-rate mortgages with these terms:. For a given loan amount, the monthly payments are more affordable than on a year mortgage and less affordable than on a year mortgage.

Fixed-rate mortgages are easier to understand, making shopping easier. If mortgage rates rise after you get your home loan, you have the safeguard of an unchanging rate on your fixed-rate mortgage.

If interest rates fall after you get your home loan, the only way to take advantage of lower mortgage rates is to refinance. An ARM could be cheaper if you expect to sell the home or refinance to a fixed-rate loan before the low-rate introductory period ends. Rates are higher than in the introductory phase of an adjustable-rate loan, but ARM costs can increase later.

Fixed-rate mortgage definition. How fixed-rate mortgages work. Common fixed-rate mortgage terms. Jumbo 30 Year Fixed. In your inbox every Thursday. A valid email address is required. You must check the box to agree to the terms and conditions. Thanks for signing up!

Sign up. Trending 1. Follow Us Facebook externa link icon. Twitter externa link icon. Instagram externa link icon. LinkedIn externa link icon. YouTube externa link icon. In your inbox every Tuesday. Tell us what you think Did this article answer your questions?

Yes No. What are your favorite topics to read about? We want to make sure we're covering the subjects you're most interested in. Time is Up! What did we miss?

Let us know what questions you still have about this topic or any others. Thanks for your feedback! But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.

While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money. Founded in , Bankrate has a long track record of helping people make smart financial choices. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.

Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.

We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers.

Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades.

Bankrate follows a strict editorial policy , so you can trust that our content is honest and accurate. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site.

While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. This content is powered by HomeInsurance. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions such as approval for coverage, premiums, commissions and fees and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.