A fixed-rate mortgage is the simplest and the most common of all mortgage products. During the past few years, demand for fixed-rate mortgages increased due to historical low mortgage interest rates. With lower interest rates, payments of fixed-rate mortgages are more affordable, and therefore the borrower is able to qualify for a larger mortgage loan. The only difference among fixed-rate mortgages is the length of the mortgage term. The term is the amount of time it takes to pay off the loan. Fixed-rate mortgages allow a borrower to be sure of their monthly mortgage payments. Unlike an adjustable-rate mortgage, the payment amount is fixed over the life of the loan. Fixed-rate mortgages have two distinct features:
- The interest rate and payments must be fixed over the term of the mortgage.
- The mortgage must be paid off completely at the end of its term.