BANKING AFFAIRS

Detailed explanation-1: -A fixed-rate mortgage loan is one where the interest rate remains fixed for the duration of the loan term, regardless of what goes on in the macroeconomic environment or with a lender’s “reference rates.”

Detailed explanation-2: -A fixed-rate mortgage has the same interest rate throughout the life of the loan. Your monthly payment of principal and interest won’t change, though your overall payment can, depending on how your taxes and homeowners insurance fluctuate.

Detailed explanation-3: -In a fixed-rate loan (also called a term loan), the interest rate stays the same for the loan’s entire term. For example, you could have a loan with a 15-year amortization and a five-year term. During that five-year term, the interest rate would be “locked in.”

Detailed explanation-4: -With a fixed-rate loan, your interest rate and monthly principal and interest payment will stay the same. Your total monthly payment can still change-for example, if your property taxes, homeowner’s insurance, or mortgage insurance might go up or down.

Detailed explanation-5: -The type of mortgage also impacts your payments. With a fixed-rate mortgage, payments you make each month will stay the same for the full duration of the mortgage term. With a variable-rate mortgage, while the amount you pay stays the same through the term, the amount that goes toward interest can fluctuate.