A Fixed Rate Loan

The most common and conservative type of mortgage financing is a fixed rate mortgage. Fixed rate mortgages can be setup for any number of years divisible by 5 (i.e. 5 years, 10 years ,15 years, 20 years, 25, or 30 years), but because rates differ in only three categories, most people choose a term of either 15, 20, or 30 years.

This type of financing is best suited for the person who is planning on being in his or her home for a longer period of time, for someone on a very fixed income, and/or someone who wants to know what his or her mortgage payment will be for the life of the loan -- knowing that his or her payment will not change based on market fluctuations.