What is a Fixed-Rate Loan?

Fixed-Rate Loans

Lock in your loan at a low fixed-rate with terms from 10 to 40 years

The monthly payment remains the same for the life of this loan. The interest rate is locked in and does not change. Loans have a repayment life span of 30 years; shorter lengths of 10, 15 or 20 years are also commonly available. Shorter loans will have larger monthly payments that are offset by lower interest rates and lower overall cost.

Example – A $200,000 fixed-rate mortgage for 30 years (360 monthly payments) at an annual interest rate of 4.5% will have a monthly payment of approximately $1,013. (Taxes, insurance and escrow are additional and not included in this figure.) The annual interest rate is broken down into a monthly rate as follows: An annual rate of, say, 4.5% divided by 12 equals a monthly interest rate of 0.375%. Every month you’ll pay 0.375% interest on the amount you actually owe on the house.

Your first payment of $1,013 (1 of 360) applies $750 to the interest and $263 to the principal. The second monthly payment, as the principal is a little smaller, will accrue a little less interest and slightly more of the principal will be paid off. By payment 359 most of the monthly payment will be applied to the principal.

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