2007-12-10 09:36:40 · 5 answers · asked by Sunshine 1 in Business & Finance ➔ Renting & Real Estate
It is the interest rate you are borrowing at and the "fixed" means this interest rate will not change throughout the life of the loan.
EX: 30 year loan at 7.5% Fixed means your payments won't change. You will pay the same amount each month and the interest rate won't change.
2007-12-10 09:42:30 · answer #1 · answered by The Drew 4 · 1⤊ 0⤋
A fixed rate is one that will stay the same for the entire term of the loan.
Your payment consists of principal and interest (P&I), and maybe taxes and/or insurance (T&I).
The principal and interest portion of the payment will never change, although every month the dollar amount that goes to principal increases and the dollar amount that goes to interest decreases. In the beginning of the term you'll pay mostly interest. Each payment reduces the principal balance so that the dollar amount of the interest goes down each month. Since the payment remains the same, the proportions are what change.
Taxes & insurance will change over the years. But they are not affected by the loan, the rate or the type of loan you have. They're just going to change.
2007-12-10 09:47:36 · answer #2 · answered by Debdeb 7 · 0⤊ 0⤋
a fixed interest rate is where the rate of interest on a loan will not change until the fixed rate term expires. interest rates are always changing and in a rising rate environment you may wish to fixed the rate in an effort to pay less interest than the variable rated. in an environment where the rate is going down, you may wish to have a variable interest rate on your loan to take advantage of each rate decrease. if you choose to start with a variable rate you can easily change it to fixed (for a set term) but if you have a fixed rate and want a variable rate, you will have to wait for the term to expire or pay a fee to exit your fixed rate conditions.
basically:
- when rates are going up - fixed
- when rates are going down - variable
hope this helps
2007-12-10 09:49:48 · answer #3 · answered by bundy&coke 2 · 0⤊ 0⤋
A fixed rate is where the "rate" will not go up or down. It stays in one place all the time.
2007-12-10 09:40:52 · answer #4 · answered by Mark 6 · 0⤊ 0⤋
Mark is right... fixed not an ARM... will stay at that beginning interest for the term of the loan.
2007-12-10 09:56:23 · answer #5 · answered by teaglet1 1 · 0⤊ 0⤋