Fixed Rate Mortgages
A traditional fixed-rate mortgage is a popular loan option where the monthly principal and interest payments remain constant throughout the loan term. These mortgages, typically available in terms from 10 to 30 years, can usually be paid off early without penalties. The loan is "amortized," meaning it's structured to be fully paid off by the end of the term.
Even with a fixed-rate mortgage, your monthly payment might change if you have an "impound account." In this setup, the lender collects additional funds each month for property taxes and homeowners insurance, in addition to the regular principal, interest, and any mortgage insurance premiums (often required for down payments below 20%). These extra funds go into the impound account, which the lender uses to pay taxes and insurance when due. If property taxes or insurance costs change, your monthly payment will adjust accordingly. Despite this, fixed-rate mortgages remain generally stable and predictable.