There are three basic choices you will have when mortgaging your property, fixed, adjustable, or hybrid mortgages. There are variations of each.

The fixed interest rate mortgage (FIRM) is the traditional way to finance a home. At one time, it was the only mortgage offered by most lenders. It is also the easiest to understand because there are no changes over the life of the loan. A FIRM has a set rate of interest requiring an equal payment for a specific number of years. Future fluctuations of interest rates have no bearing on the loan.

Example: If you have a thirty-year loan at 7% interest with a $1,000 per month payment, that is it. You will pay $1,000 per month every month for thirty years. Your interest rate will always be 7%. Even if you make additional payments to reduce what you owe in order to pay the loan off sooner, your interest rate and payment amount will remain the same.

When interest rates are low and you expect to keep your property for many years, this is the best loan you can get.