Definition
Fixed-rate mortgages lock your interest rate for the entire loan period. Your principal and interest payment never changes, making budgeting predictable. They protect you from rising rates but may have higher initial rates than adjustable mortgages.
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Fixed-rate mortgages provide payment stability and predictability, making budgeting easier for homeowners. This type protects borrowers from rising interest rates but may have a higher initial rate than adjustable mortgages. They are the most common mortgage type in the U.S., favored for their simplicity and protection against market rate increases.
Pro Tip
Fixed-rate mortgages are ideal when interest rates are historically low or when you prefer payment certainty over the potential for lower initial rates.
Example
A borrower gets a $300,000 30-year fixed-rate mortgage at 6.5% interest. Their monthly principal and interest payment will be approximately $1,896 for all 360 months, regardless of how interest rates change.