A fixed-rate mortgage loan is one on which the monthly payment does not change, regardless of what happens to market interest rates. Your monthly payments will be stable and predictable, but initial interest rates tend to be higher on a fixed rate mortgage than on an adjustable rate loans. The term or length of fixed-rate mortgages is generally set to be 15 or 30 years. No matter how much interest rates fluctuate, your payment remains the same throughout the length of the loan. Because of this, you know what your mortgage payment will be and can plan accordingly.

 

Some sellers have mortgages on the property that they are trying to sell that can be assumed by a new buyer. These mortgages, called assumable mortgages, are the loans that can be transferred to a new owner. In other words, the new buyer assumes or takes over the mortgage obligations. There are certain advantages to this type of fixed-rate mortgage, most notably regarding interest rates. It is possible for the person assuming the loan to take it over with a lower interest rate than he/she could get taking out a new home loan. Many fixed-rate mortgages, however, cannot be assumed by a subsequent buyer.