A fixed Rate Mortgage is a mortgage loan containing a interest rate on the note that remains the same through the life of the loan, as opposed to a adjustable rate mortgage.

So what is the difference between a Fixed Rate and an adjustable rate?
Let's say you get a 30 year Fixed Rate mortgage on $100k loan at 6% interest. This mean you will pay $599.55 for the principle and interest for the next 30 years, the only variable in the monthly payments will be your property taxes and insurance.
But now if you get a 30 year Adjustable rate mortgage for the same $100k with a starting rate of 6% for 3 years, containing a rate cap of 12%, adjustable yearly. Your initial monthly payments could start at $600 monthly, but go as high as $888 before you know it.

A fixed rate mortgage just means that your rate will not change throughout the life of the loan.

There are time when a fixed rate is better than an adjustable rate, and there are time where it the other way around. Let's say the going rate is 9% but it is believed that the interest rate will soon go lower. Since normally adjustable rates start with a lower rate, then most people take the adjustable rate and later re-finance when the rates lower.

But if the interest rates are low, why not take advantage and lock them in!

Get more information on Fixed Rate Mortgage in the Real Estate Forum