FRM mortgage payments
Mortgage payments vary according to the type of loan you select.
For instance, there are significant differences between payments
for fixed-rate mortgages (FRMs) and adjustable-rate mortgages
(ARMs). This page describes what kind of mortgage payment you
can expect after you have obtained an FRM.
The primary characteristic of fixed-rate mortgage payments is
that they are stable over time. When you obtain the loan, your
lender will do some complicated math to figure out how much the
total cost of your loan will be. Then, that number is divided
by however many months are in your term. (A 15-year term would
have 180 months, while a 13-year term would have 360). So the
equation is as follows: the total cost divided by total months
equals the amount of each monthly mortgage payment.
To take an example, let’s say that Nathan’s lender
has figured out that the total cost of his loan will be $180,000.
He selects a 15-year term, which makes the period of his repayment
180 months. $180,000 divided by 180 equals $1000, which is what
Nathan’s monthly mortgage payment will be each and every
month across the life of his loan. (Note: Unless he chooses to
prepay, but that’s another story.)
Most borrowers appreciate knowing what their monthly mortgage
payment will be because it helps them devise a budget that will
work indefinitely. Even if there is some sort of market disaster
where interest rates shoot up dramatically, FRM borrowers will
never have to worry about making a higher monthly payment. These
payments are predictable, which is a comforting quality in these