Fixed rate mortgages

Why most borrowers choose fixed

With a fixed rate mortgage you know exactly what your principal and interest payment will be in year one and in year twenty-nine. If rates rise, your rate does not. If rates fall far enough, you can refinance. For clients who plan to stay in their home for a long time, that certainty is worth more than a slightly lower starting rate on an adjustable loan.

Fixed rate loans are available as conventional, FHA, VA, USDA and jumbo loans, and we arrange terms of 10, 15, 20, 25 and 30 years.

30-year fixed vs 15-year fixed

The 30-year fixed keeps the payment as low as possible, which matters at California prices. The 15-year fixed carries a lower rate and builds equity quickly, at the cost of a much higher payment. Here is an illustration on a $600,000 loan, using example rates of 6.5% and 5.875% (not today’s quotes):

	30-year fixed	15-year fixed
Example rate	6.5%	5.875%
Monthly principal and interest	$3,792	$5,023
Total interest over the term	$765,267	$304,088

The 15-year saves a large amount of interest, but the payment is far higher. A 20-year term sits between the two, and many of our refinance clients pick it to avoid restarting a full 30 years. See live pricing for every term on the rates page, or try different amounts in the amortization calculator.

Benefits of a fixed rate mortgage

• Payment stability. Principal and interest never change, which makes budgeting simple.
• Protection from rising rates. Your rate is locked for the life of the loan.
• Freedom to refinance. If rates drop, you can refinance; there is no prepayment penalty on the loans we arrange.
• Simple to compare. Rate, APR and closing costs tell the whole story, with no caps or margins to read.

When a fixed rate may not be the best choice

If you expect to sell or refinance within five to seven years, an adjustable rate mortgage may cost less while you own the home, when it is priced below the fixed rate. And if you already have a low fixed rate and want cash, keep it: a HELOC lets you borrow against your equity without replacing your fixed rate mortgage.

Choosing points or credits

Every fixed rate comes with a range of prices. You can pay discount points to buy the rate down, take the par rate with no points or credit, or accept a slightly higher rate in exchange for a lender credit toward closing costs. If you plan to keep the loan a long time, points can pay off. If you might refinance in a few years, a credit usually makes more sense. Our rate page shows all of these options for the same loan, with the closing costs itemized.

Fixed rate refinancing

Many fixed rate loans we close are refinances: an owner leaving an adjustable loan before it resets, moving from 30 years to 20 or 15 to pay the home off by a target date, or dropping mortgage insurance once the home has gained value. If your current fixed rate is above today’s, a rate-and-term refinance may lower the payment. Compare the break-even point on our refinance calculator and see the refinance page for when it pays.

The 30-year and 15-year fixed are the most popular loans for good reason: they are simple, predictable and easy to compare across lenders, which is exactly where a direct lender with the option to broker can save you money.