Fixed Rate Loans & Commercial Fixed Rate Mortgages

The traditional fixed rate commercial mortgage is one of many types of commercial loan programs. Monthly principal and interest payments never change during the life of the loan. Fixed rate commercial mortgages are available in terms ranging from 5 to 30 years. 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 slightly if you have an “impound account.” In addition to the monthly loan payment, some lenders collect additional money each month for the prorated monthly cost of property taxes and hazard insurance. The extra money is placed in an impound account held by the lender. The lender uses the impound account funds to pay the commercial property borrowers’ property taxes and hazard insurance premium as they come due. If either the property taxes or the hazard insurance premium changes, the borrower’s monthly payment will be adjusted accordingly. However, the principal and interest portion of the fixed rate mortgage payments remain stable and predictable. Who in the financial world doesn’t like stability and predictability?