Business and Personal Finance Dictionary

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• FIXED RATE MORTGAGE
  
  A fixed rate mortgage is a long-term loan you use to finance a real estate purchase, typically a home. Your borrowing costs and monthly payments remain the same for the term of the loan, no matter what happens to market interest rates. This consistency is one of a fixed rate loans most attractive features, since you always know exactly what your mortgage will cost you. If interest rates rise, a fixed mortgage works in your favor. But if market rates drop, you would have to refinance to take advantage of the lower rate to reduce your mortgage costs. Fixed rate mortgages, which are available in 15-, 20-, and 30-year terms, tend to more common than adjustable rate mortgages except in periods when the market interest rates are high.
  
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