Fixed rates are the most popular type of home loans and they come in: 15 year, 20 year, 30 year , 40 year and even 50 year terms with the most popular type being 30 year fixed rates loans.
Fixed rates maintain the same interest rate during the life of the loan unless you refinance prior to the end of the loan. Fixed rates are a great way to know exactly what your mortgage payment will be year after year. The only changes that can occur with respect to fixed rates would be: a change in PMI (once the loan is for less than 80% of the value of your home then you will no longer pay PMI) or any changes in property taxes that are being held in escrow by the bank.
Fixed rates are easy to amortize so you will see exactly what % of your payment is going towards interest and what % is going towards principal during the life of the loan. Variable rates cannot be amortized completely since it is unclear what the interest rate will be during the life of the loan.
Though most buyers get 30 year, fixed rates loans, it is always a good idea to speak with your loan officer and accountant to determine what your best options are. Everyone has different personal and financial obligations and situations that will have a significant impact on what type of home loan is best for them, including choosing between variable rates and fixed rates.
