Fixed-Rate Mortgage (FRM)
Fixed-rate mortgages are popular because they’re relatively simple and low-risk. The most common types are 15- and 30-year FRMs, although other terms are available.
Advantages
- Stable monthly payments
- Rising interest rates have no effect on the cost of borrowing
- The opportunity to make extra payments on the principal can significantly reduce the length and cost of the loan
- The mortgage is paid in full by the end of the term
Disadvantages
- Falling interest rates have no effect on the cost of borrowing
- The interest charged is generally higher for FRMs, because lenders assume the risk of any gap between your long-term rate and what they could get on a new mortgage in a tight money market
- Penalties for paying off the loan early are often included, which can be hefty
The Jim Snyder Way 