The most common type of mortgage program is where your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable.
Fixed-rate mortgages are available for 30
years, 20 years, 15 years and even 10 years.
There are also ""bi-weekly""
mortgages, which shorten the loan by calling
for half the monthly payment every two weeks.
(Since there are 52 weeks in a year, you make
26 payments, or 13 "months" worth,
every year.)
Fixed rate fully amortizing loans have two
distinct features. First, the interest rate
remains fixed for the life of the loan. Secondly,
the payments remain level for the life of
the loan and are structured to repay the loan
at the end of the loan term. The most common
fixed rate loans are 15 year and 30 year mortgages.
During the early amortization period, a large
percentage of the monthly payment is used
for paying the interest . As the loan is paid
down, more of the monthly payment is applied
to principal . A typical 30 year fixed rate
mortgage takes 22.5 years of level payments
to pay half of the original loan amount.
