Fixed rate mortgages, also known as FRMs are a type of home loan that locks in a particular interest rate for the duration of the term of the mortgage. Whereas other types of mortgages have interest rates that fluctuate over the course of the term based on economic factors (like: adjustable rate home loans) fixed rate mortgages offer a guaranteed rate that will not change for however long the term of the loan is set for. Variations of fixed mortgages such as mortgages that offer a fixed rate for a percentage of the term (often 50/50) have recently gained in popularity as they offer the potential to renegotiate for a better interest rate.
In general the payment amount (whether its a weekly, biweekly or monthly) remains the same, that is to say the principal and interest amount will not change. Changes in payment amount may change based on any additional costs (generally in escrow) including home owners insurance, condo fees, property tax etc.
If you would like to make a calculation to see your monthly payment amount simply take the following four pieces of information: total amount of the mortgage, interest rate, the term of the loan (1-50 years), and the time to compound the interest.
Compounded interest may change depending on the country. It is common practise in Canada to have interest compounded twice a year whereas the United States typically compounds the interest once a year.
Knowing the variables you can plug everything into an Excel spread sheet under PMT in the financial tab. For a loan of 200,000 over the course of 30 years and an interest rate of 6.5% your formula will look this: =PMT(6.5/100/12,30*12,200000) =((6.5/100/12)/(1-(1+6.5/100/12)^(-30*12)))*200000 = 1264.14
Good luck with your mortgage, for more information on mortgages, rates and quotes please see our site TopMortgagesFinder com.
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