Fixed Rate Mortgage Pros and Cons

Fixed Rate Mortgage Pros and Cons

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru
Edited by Harry Jensen
A fixed rate mortgage is the most popular type of mortgage program because of the certainty it provides borrowers.  With a fixed rate mortgage borrowers pay a fixed interest rate and monthly payment over a set number of years.  A fixed rate mortgage offers several advantages and disadvantages when compared to an adjustable rate mortgage (ARM) or interest only mortgage.

Fixed rate mortgage positives include knowing your interest rate and monthly payment cannot increase, flexible mortgage length options and borrower peace of mind.  Fixed rate mortgage negatives include a higher interest rate and monthly payment relative to an ARM or interest only mortgage and being locked into the mortgage if you cannot refinance.

We review the full list of the pros and cons for a fixed rate mortgage below.  Borrowers should understand both the positives and negatives of a fixed rate mortgage to determine if it is the right type of mortgage for them.

Fixed Rate Mortgage Pros

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Interest Rate Cannot Increase

A fixed rate mortgage lives up to its name because the interest rate cannot change or increase over the life of the mortgage.  This provides borrowers with significant certainty over the life of their loan.  Even if mortgage rates increase, economic factors fluctuate or your personal financial profile changes, the interest rate on your mortgage remains the same.

The lender table below compares interest rates and fees for 30 year fixed rate mortgages.  The interest rate for a 30 year loan is higher than for a shorter term loan such as a 15 year mortgage but the monthly payment is lower.  Contact  multiple lenders in the table to shop for your mortgage.

Current Mortgage Rates in Ashburn, Virginia as of April 24, 2024
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Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes or insurance premiums. Actual payments will be greater with taxes and insurance included. Read through our lender table disclaimer for more information on rates and product details.
Mortgage pro

Monthly Payment Does Not Change

Because your interest rate cannot change, your monthly mortgage payment does not change with a fixed rate mortgage.  With other mortgage programs such as an adjustable rate mortgage (ARM) or interest only mortgage, your monthly payment is subject to change and potentially increase significantly over the life of the loan.  Some borrowers may not be able to afford a mortgage payment that increases suddenly, especially if their financial circumstances have changed since they obtained their mortgage.  A fixed rate mortgage eliminates the risk the borrowers may be required to make a higher mortgage payment over the course of the loan, which is a key positive.

Mortgage pro

Attractive Option When Rates Are Low

A fixed rate mortgage is an ideal home financing option when interest rates are low.  In this scenario borrowers are able to lock in a low interest rate which improves their ability to qualify for a mortgage and results in a lower monthly payment.  For most borrowers, the lower the interest rate, the larger the mortgage you can afford.  Additionally, with a fixed rate mortgage borrowers benefit from the lower mortgage rate over the life of their loan without worrying about an increase in interest rates in the future.

Mortgage pro

Flexible Mortgage Term Options

A fixed rate mortgage offers more flexible mortgage term options than other mortgage programs.  Lenders usually offer fixed rate mortgages with a range of terms including 10, 15, 20, 25 and 30 years.  Some lenders even offer a 40 year term although this is relatively rare.  With a fixed rate mortgage, the shorter the term, the lower the interest rate and the longer the term, the higher the interest rate.  A mortgage with a shorter term and lower rate reduces your total interest expense over the life of your loan although you are required to pay a higher monthly payment because you are amortizing, or paying back, the loan over a shorter period of time.  By offering a range of loan lengths, a fixed rate mortgage enables borrowers to select the mortgage term that meets their financial goals. 

Mortgage pro

Peace of Mind

The main benefit of a fixed rate mortgage is the peace of mind it provides borrowers.  Borrowers with a fixed rate mortgage can sleep better knowing that their interest rate and mortgage payment cannot change.  For borrowers with a 30 year loan, that means three decades of mortgage certainty.  Borrowers with a lower appetite for risk are usually well-served by selecting a fixed rate mortgage.

Use our free mortgage quote form to review fixed rate loan proposals from leading lenders in your area.  Our mortgage quote feature is easy-to-use, requires minimal personal information and does not impact your credit profile. Comparing quotes is one of the best ways to save money on your mortgage.

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Fixed Rate Mortgage Cons

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Higher Interest Rate Than Other Mortgage Programs

The interest rate on a fixed rate mortgage is usually higher than the rate on an adjustable rate mortgage (ARM) or interest only mortgage although the rate on an ARM or interest only mortgage is subject to change after the first three, five, seven or ten years, depending on the type of mortgage.  Paying a higher interest rate may limit the size of mortgage you qualify for and means you could potentially pay more in total interest expense over the life of the loan.

Mortgage pro

Higher Monthly Payment

A higher interest rate for a fixed rate mortgage as compared to the initial interest rate for an ARM or interest only mortgage results in a higher monthly payment.  A higher monthly payment is the essentially the cost for the greater financial certainty provided by a fixed rate mortgage.  Borrowers should weigh the benefits of a fixed rate mortgage against the cost of a higher monthly payment (at least for the initial three-to-ten years of the loan) when deciding what type of mortgage is right for them.

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Locked Into Interest Rate If You Cannot Refinance

One of the positives of a fixed rate mortgage -- that your interest rate cannot change -- can also be a negative if interest rates decline and you cannot refinance your mortgage.  With an ARM or interest only mortgage, if interest rates go down then your mortgage rate likely decreases as well.  With a fixed rate mortgage, however, your mortgage rate is set and not affected by fluctuations in interest rates.  If interest rates go down you must refinance your mortgage to benefit from the lower rate.  Refinancing your mortgage can be costly and time consuming.  Additionally, changes in your financial profile such as a job loss or decline in your credit score may prevent you from refinancing.  In that case you are stuck paying the higher rate even thought mortgage rates have declined.

More FREEandCLEAR Resources

Mortgage Guides

How a Fixed Rate Mortgage Works

Review our comprehensive overview of how a fixed rate mortgage works including key program terms and helpful examples.

Mortgage Calculators

Mortgage Calculator

Use our Mortgage Calculator to determine the monthly payment and total interest expense over the life of a loan for a fixed rate mortgage based on interest rate and loan term.  Also review how the split between principal and interest payments change over the course of the mortgage.


Mortgage Rates

Review interest rates for a fixed rate mortgage in your area based on loan length and other factors.  Comparing interest rates from multiple lenders is the best way to find the mortgage that is right for you.


Mortgage Program Comparison

Compare fixed rate, adjustable rate (ARM) and interest only mortgages including key features such as monthly payment, interest rate and risk level to determine the program that meets your personal profile and financial objectives. 


"Fixed-rate Mortgages."  My Home by Freddie Mac.  Freddie Mac, 2019.  Web.

About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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