Fixed Rate Mortgage
The most common type of mortgage program is a fixed rate loan. Fixed rate loans have two distinct features. The interest rate does not change over the life of the loan, this means that your monthly principal and interest payment will not change during the loan term. Secondly, the loan amount is generally entirely repaid in equal monthly payments, which means you won't owe a larger balloon payment at the end of the loan term.

Since many consumers are leery of interest rates that could change during the life of the loan or by having a lump payment due at the end of the loan term, fixed rate loans are the most popular loan types.

Fixed-rate mortgages are available for different loan terms, the most popular are 30 years, 20 years and 15 years. Fixed rate loans with shorter terms generally have lower interest rates than those with longer terms. Of course, you'll need to balance that comparison with the larger monthly payment required to repay the loan. Some lenders also offer "bi-weekly" mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every year.)

During the early years of a loan, a large percentage of the monthly payment is used for paying the interest due. As the loan is paid down, more of the monthly payment is applied to principal. A typical 30 year fixed rate mortgage takes over 22 years of regular monthly payments to pay half of the original loan amount.
 
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