Who it is for
- You want a payment you can plan around.
- You expect to keep the loan long enough that an adjustable rate’s later jumps are not a trade you want.
- You would rather pay more each month to be done sooner.
How it usually works
- Pick the term from how long you will actually keep the house and the loan, not from the smallest payment on a screen.
- Compare the total interest, not only the monthly number.
- If you are stretching to a longer term to lower the payment, say that out loud and price the extra interest.
Read this before you get attached
- “Fixed” does not freeze your escrow. Tax and insurance bills move.
- Paying points for a lower rate only helps if you keep the loan past the break-even.
Questions worth asking
- What is the payment on a 15-year and a 30-year, side by side?
- Are points included, and what is the break-even?
- Is there a prepayment penalty if I pay extra principal?