A fixed-rate mortgage has an interest rate that remains unchanged during the mortgage term.
What Stays Fixed?
The interest rate stays fixed. On a standard fully amortizing fixed-rate mortgage, the scheduled principal-and-interest payment also remains level.
What Can Still Change?
- Property taxes
- Homeowners insurance
- Mortgage insurance
- HOA or condominium fees
Why Buyers Choose It
The primary benefit is predictability. The borrower knows the mortgage rate will not reset because market interest rates move.
Tradeoff
An adjustable-rate mortgage may sometimes offer a lower introductory rate. A fixed-rate borrower gives up that possible initial advantage in exchange for long-term rate certainty.
Homebuyer takeaway: A fixed interest rate does not guarantee that the total monthly housing payment can never change.
Sources
Freddie Mac: Considering a Fixed-Rate Mortgage