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What are fixed rate loans?

With a conventional fixed rate loan, the interest rate charged remains fixed throughout the life of the loan and the monthly payments do not change. While a fixed rate loan offers the borrower security that their payment will not increase, they also do not allow the borrower to take advantage of dropping interest rates. The borrower will need to refinance with a new loan to reduce the interest rate. Fixed rate mortgages are usually 15 or 30 years, but loans of up to 40 years can be found with some lenders. The longer the term of the mortgage is, the lower the monthly payment.

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