Fixed-rate mortgage

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A fixed rate mortgage ( FRM ), commonly referred to as a "vanilla wafer" mortgage loan, is a fully amortized mortgage loan in which the interest rate on the note remains the same over a period of time loans, compared to loans in which the interest rate can adjust or "float". As a result, the payment amount and loan term are set and the person responsible for repaying the loan benefits of a consistent single payment and the ability to plan a budget based on these fixed costs.

Other forms of mortgage loans include mortgage interest only, mortgage payments, variable interest rate mortgages (including adjustable mortgage rates and tracking mortgages), negative amortization mortgages, and mortgage balloon payments. Unlike many other types of loans, FRM interest payments and loan terms are fixed from start to finish.

Fixed-rate mortgages are characterized by loan amount, interest rate, frequency of compounding, and duration. With these values, monthly payments can be calculated.

Video Fixed-rate mortgage

Ikhtisar

Unlike mortgage rates (mortgages), fixed rate mortgages are not tied to the index. Instead, the interest rate is set (or "fixed") in advance to the advertised level, usually in a multiple of 1/4 or 1/8 percent.

Fixed monthly fixed deposit for fixed rate mortgages is the amount paid by the borrower each month to ensure that the loan is fully repaid in interest at the end of its term of service.

Maps Fixed-rate mortgage

Worldwide use

The Federal Housing Administration of the United States (FHA) helps develop and standardize fixed rate mortgages as an alternative to paying mortgage balloons by insuring them and thereby helping the use of design mortgage garner. Due to large payouts at the older end, loan balloon payments, refinancing risks result in widespread foreclosures. The fixed rate mortgage is the first fully amortized mortgage loan (paid in full at the end of the loan) blocking the loan in a row, and has a fixed interest rate and payment.

The fixed rate mortgage is the most classic loan form for home and product purchases in the United States. The most common term is a 15 year and 30 year mortgage, but shorter provisions are available, and 40 and 50 year old mortgages are now available (common in areas with high-priced housing, where even a 30-year period leaves the amount of mortgages outside average family coverage).

Outside the United States, interest rate mortgages remain less popular, and in some countries, fixed-rate mortgages are not really available except for short-term loans. For example, in Canada, the longest period in which the mortgage rate can be set is usually no more than ten years, while the mortgage maturity is usually 25 years. The fixed rate mortgage in Singapore only has a fixed interest rate for the first three to five years of the loan, after which it will become variable. In Australia, an introductory "honeymoon" mortgage is common, but it can last as short as a year, and may offer a fixed reduction in the interest rate rather than the fixed interest rate itself. In addition, they are often combined with flexible mortgage properties to create what is known as an Australian mortgage, which often allows the borrower to pay more to reduce interest costs and then withdraw this overpayment in the future.

The mortgage industry in the UK has traditionally been dominated by the building community, which raises funds at least 50%, so lenders prefer mortgages with fixed rates for fixed rate mortgages to reduce asset-liability mismatches due to interest rate risk. Lenders, in turn, influence consumer decisions that already prefer lower initial monthly payments. Nationwide Commercial recently issued a 30-year fixed-rate mortgage as bridging finance.

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Comparison

Fixed rate mortgages are usually more expensive than adjustment rate mortgages. Due to the inherent interest rate risk, long-term fixed interest rates will tend to have higher interest rates than short-term loans. The relationship between interest rates for short- and long-term loans is represented by the yield curve, which is generally upward sloping (long term is more expensive). The opposite is known as a reversed and rare curve.

The fact that fixed rate mortgages have a higher initial interest rate does not indicate that this is a worse form of lending than the adjustable rate of mortgages. If interest rates rise, ARM costs will be higher while FRM will remain the same. As a result, the lender has agreed to take interest rate risk on a fixed rate loan. Some studies show that the majority of borrowers with adjustable mortgage rates save money in the long run, but some borrowers pay more. The price has the potential to save money, in other words, offset by a potentially higher cost risk. In each case, the choice must be made based on the loan term, the current interest rate, and the likelihood that the rate will increase or decrease over the life of the loan.

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Pricing

• Notes : Fixed interest rate mortgages can be exacerbated differently in other countries, such as in Canada, where it is exacerbated every 6 months.

Fixed monthly fixed rate mortgages are the amount paid by the borrower each month to ensure that the loan is repaid with interest at the end of the semester. This monthly payment ${\ displaystyle c}$ depending on the monthly interest rate ${\ displaystyle r}$ ${\ displaystyle N}$ is called the term loan, and the amount borrowed ${\ displaystyle P_ {0}}$ is known as a loan principal; reorganizing the formula for the present value of the regular annuity we get the formula for ${\ displaystyle c}$ :

$Â\; ÂÂ\; Â\; Â\; ÂÂ\; Â\; Â\; Â\; Â{\displaystyle Â\; Â\; Â\; Â\; Â\; Â\; Â\; ÂcÂ\; Â\; Â\; Â\; Â\; Â\; Â\; Â=Â\; Â\; Â\; Â\; Â\; Â\; Â\; ÂÂ\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\frac{r}{Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â1Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â-Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â()\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â1Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; ÂÂ\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; ÂrÂ\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â{)}^{Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â-Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; ÂNÂ\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â}Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â}Â\; Â\; Â\; Â\; Â\; Â\; Â\; ÂÂ\; Â\; Â\; Â\; Â\; Â\; Â\; ÂP_{Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â0Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â\; Â}Â\; Â\; Â\; Â\; Â\; Â}Â\; Â\; Â\; ÂAnnotation\; encoding\; =\; "application/x-tex">\; \{\backslash \; displaystyle\; c\; =\; \{r\; \backslash \; over\; \{1-\; (1\; r)\; ^\; \{-\; N\}\}\}\; P\_\; \{0\}\; Â\; Â$

Misalnya, untuk pinjaman rumah sebesar $ 200.000 dengan suku bunga nominal tahunan tetap sebesar 6,5% selama 30 tahun, pokoknya adalah ${\ displaystyle P_ {0} = 200000}  ÂÂ$ , tingkat bunga bulanan adalah ${\ displaystyle r = 6.5/100/12}  ÂÂ$ , jumlah pembayaran bulanan adalah ${\ displaystyle N = 30 \ cdot 12 = 360}  ÂÂ$ , pembayaran bulanan tetap ${\ displaystyle c = \ $ 1264.14}  ÂÂ$ . Formula ini disediakan menggunakan fungsi keuangan PMT dalam spreadsheet seperti Excel. Dalam contoh, pembayaran bulanan diperoleh dengan memasukkan salah satu dari rumus ini:

= PMT (6.5/100/12,30 * 12,200000)

= ((6.5/100/12)/(1- (1 6.5/100/12) ^ (- 30 * 12))) * 200000

${\ displaystyle {} = 1264.14}  ÂÂ$

This derivation illustrates three major components of fixed-rate loans: (1) monthly repayment depends on the loan amount, the interest rate, and the length of the loan repayment; (2) the amount paid per month is equal to the outstanding amount of the preceding month plus such an interest, minus fixed monthly payments; (3) monthly payments are still selected so that the loan is fully paid off at interest at the end of the term of office and no more money is due.

Vendors can sell repair elements as "fixed to floating" derivatives. Look for "Black-Scholes" to see how this is done.

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See also

• Mortgages with adjusted interest rate
• Singapore Swap Bid Rate (SOR)
• SIBOR
• VA loan
• FHA Loan

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References

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External links

• Daily Fixed Mortgage Rates by Mortgage News Daily, Daily Mortgage Market Survey

Source of the article : Wikipedia