Loans
Fixed-Rate Mortgage
A mortgage with an interest rate that stays the same for the entire loan term, giving you a predictable monthly payment. The most common terms are 30 years and 15 years. A 15-year fixed-rate mortgage has higher monthly payments but saves significantly on total interest. Fixed-rate mortgages are the most popular choice for homebuyers who want stability and plan to stay in their home long-term.
Why It Matters
A fixed-rate mortgage locks your interest rate for the entire loan term — your principal and interest payment never changes. On a 30-year fixed at 6.5%, your P&I payment on a $300,000 loan is $1,896/month from month 1 through month 360. This predictability makes budgeting simple and protects you if rates rise.
Fixed-rate mortgages come in 10, 15, 20, 25, and 30-year terms. Shorter terms have lower rates (typically 0.5-0.75% less for 15-year) and save dramatically on interest, but have higher monthly payments. About 90% of homebuyers choose the 30-year fixed — it offers the lowest payment and maximum flexibility, since you can always pay extra but can't lower a 15-year payment if money gets tight.
Real-World Example
$300,000 loan comparison: 30-year fixed at 6.5% = $1,896/month, $382,633 total interest. 15-year fixed at 5.75% = $2,491/month, $148,432 total interest. The 15-year saves $234,201 in interest but costs $595/month more.
Pro Tip
If you can comfortably afford the 15-year payment, the interest savings are massive. But if it would strain your budget, take the 30-year and make extra payments when you can — you get flexibility without commitment.