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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 uncertain times.

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