Fixed Rate Mortgage
The traditional fixed rate mortgage is the most common type of loan, where monthly principal and interest payments will not change during the life of the loan. Fixed rate mortgages are available in 10 to 30 years terms and in most cases can be paid off early without penalty. This type of mortgage is amortized so that it will be paid off in full by the end of the loan term.
Though you have a fixed rate mortgage, your monthly payment may vary if you have an "escrow account". In addition to the monthly principal, interest (P & I) and any mortgage insurance premium (MIP, an amount charged to homebuyers who make less than a 20% cash down payment), some lenders collect additional money each month for the prorated monthly cost of property taxes and homeowners insurance. The extra money is put in an escrow account by the lender who uses it to pay the borrowers' property taxes and homeowners insurance premium when they are due. If either the property tax or the insurance changes, the borrower's monthly payment will change slightly to cover the difference. However, the overall payments in a fixed rate mortgage are very steady and predictable.