Fixed Rate Mortgages with a set percentage rate for the life of the loan, usually carry higher rates than other types of mortgages, but they offer the security and certainty of knowing your monthly payment and interest rate will not change.

Advantages

• Stability.  Your rate never will go up, and your principal and interest payments will always remain the same.

Disadvantages

• Fixed rate mortgages generally have a slightly higher interest rate than ARM loans. The lenders are assuming the risk that the market rate may go up, and you'll be locked in at a lower rate. As a result, these types of mortgages have a premium for offering the security of the fixed rate.
  
• They are harder to obtain. Since your interest rate, and hence your initial payments, are higher than another type of mortgage, you won't be able to borrow as much as you could with another type of loan.

Common Fixed-Rate Mortgages

The 30-Year Fixed-Rate Mortgage
With 30 years to pay off the loan, these loans allow you to borrow more money for the same monthly payment than shorter loans. They may also make it possible to have a lower down payment, because the down payment will affect your monthly payment less.

The 15-Year Fixed-Rate Mortgage
With 15 years to pay off the loan, these loans may require a higher monthly payment and down payments than their 30-year counterparts, or are suitable for lower-priced homes. If you can make a higher down payment, or can afford a higher monthly payment, or the value of your home puts your monthly payments into your budget range, a 15-year Fixed-Rate Mortgage may be for you. Since the term of the loan is half as long, you can make significant savings on the total amount of interest paid on the loan.