The traditional fixed-rate mortgage is the most common type of loan program, where monthly principal and interest payments never change during the life of the loan. Fixed-rate mortgages are available in terms ranging from 10 to 30 years and in most cases can be paid off at any time without penalty. This type of mortgage is structured, or “amortized” so that it will be completely paid off by the end of the loan term. 

Even though you have a fixed-rate mortgage, your monthly payment may vary if you have an “impound account”. In addition to the monthly “principal + interest” and any mortgage insurance premium (the amount charged to homebuyers who put less than 20% cash down when purchasing their home),  some lenders collect additional money each month for the prorated monthly cost of property taxes and homeowners insurance. The extra money is put in an impound account by the lender who uses it to pay the borrower’s property taxes and homeowners insurance premiums when they are due. If either the property tax or the insurance happens to change, the borrower’s monthly payment will be adjusted accordingly. However, the overall payments in a fixed-rate mortgage are very stable and predictable.