With a fixed rate mortgage, payments for the interest rate and the principal remain fixed over the life of the loan. As a result, monthly loan payments stay the same over the life of the loan. Taxes, however, may change according to your local or state tax laws.

Advantages

• The interest rate stays the same—it doesn’t go up even if rates in the market do

• Monthly payments of principal and interest don’t change

• May be a good choice for homebuyers who plan to own their home for a long time

Disadvantages

• May cost more than other loan types—the interest rate is often higher than rates for adjustable rate mortgages
• A long-term loan may not be suitable for homebuyers planning to move or refinance within 5 to 7 years