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A fixed rate mortgage has a preset interest rate that remains the same for the entire term. You have the comfort of knowing that each month you will make the same mortgage payment. Usually the amount of your payment goes toward both reducing the outstanding principal debt as well as interest and is decided at the outset of the mortgage. Over time, the allocation of what is attributed towards principal (versus interest) changes as more goes towards principal reduction. Keep in mind that most mortgages are front-loaded with interest at the beginning. (More about this and how to pay off a mortgage sooner in Chapter 3).