Question:

What is a fixed rate mortgage (FRM) loan?

Answer:

The fixed rate mortgage (FRM) loan is the classic mortgage loan of the US. This is a mortgage loan whose rate is not going to change for the entire loan term, unlike adjustable rate mortgages. At the end of the amortizing period the borrower is supposed to have paid the loan in full to the lender.

Outside the US, FRM loans are not as popular. In some countries there may be limits on how long a mortgage rate can remain unchanged. For Canada, the limit is 10 years.

What is the duration of a fixed rate mortgage (FRM) loan?

The lifetime of an FRM spans from 15 to 50 years. Long term loans are in demand for high cost areas where even a 30-year term will make for too expensive monthly mortgage payments.

What is the temptation of fixed rate mortgage (FRM) loans?

The rate of FRM loans will remain the same throughout the life of the loan. Because of that fixed rate loans do have higher interest rates compared to ARMs. Also, the longer the term, the greater the interest rate.

FRMs carry significant higher rates than ARMs, but this does not discourage borrowers from taking ARM loans. In fact, fixed rate mortgage loans offer protection against rising rates, and are the favorite loan option for homebuyers who would like to stay in their home for a long time.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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