Third, fixed rate mortgages are self-amortizing, which means you're paying a lot more interest than principal in the early years of the mortgage than in the later years. So if you need to end the deal for any reason, say, moving, you can end up having paid a MUCH higher effective rate, quite possibly above 7-8%... I think that the structure of a self-amortizing mortgage makes this much less appealing than it looks at first blush, and I wouldn't do it.

This is a misunderstanding of loan amortization. With a fixed rate mortgage, you will always have an effective rate equivalent to the APR unless you make early payments that are not immediately applied to principle or you incur fees. With a 2% APR mortgage, your effective annual rate is (1+.02/12)^12 - 1 = 2.0184% regardless of the payment schedule. The interest portion of each payment is determined by the remaining balance on the loan. The interest payment is the fee that you pay to have borrowed the original loan amount lessened by the amount of principle that you have already repaid. You don't ever pay interest before it's accrued. It is, therefore, impossible to achieve any effective annual interest rate on the mortgage other than 2.0184% without specifically making early interest payments or incurring fees, both of which I think anyone on this board would have the good sense to avoid.

It is true, however, that a decreasing portion of each successive payment goes towards interest in all but interest-only or negative amortization schedules, but the interest portion of each payment is a function of earlier principle payments, the original loan balance, and the APR on the loan. It does not depend on the number of payments made. For example, if the original loan amount were $100,000, and $5,000 has been paid to principle, then the portion of the next payment that goes towards interest is always ($100,000-$5,000)*2%/12 = $157.36 regardless of whether this is the second payment or the sixtieth. That is the fee you pay for having an outstanding balance of $95,000, and it is equal to an effective annual interest rate of 2.0184%. That will be the effective annual interest rate whether the principle paid in the same payment is $763, as in the equal payment, 10-year schedule or $95,000, as in the situation where the house were sold.

A good metaphor would be to a savings account that is slowly being depleted. If you earn 2% APY on a $100,000 savings account, and withdraw an amount every month in excess of $167, then the proportion of each withdrawal that was earned as interest will decrease over time because of the declining account balance, but the interest rate that you are earning on the account is always the same. Even if you were to take out $100,166.67 after only one month, you would still have achieved an effective annual interest rate of 2.0184%. Now imagine that you are the bank instead of the depositor. The structure of the savings account from the perspective of the bank is exactly the structure of the mortgage from the perspective of the home owner.

**Tl;dr** The effective rate on the mortgage is not affected by paying off the mortgage early as in huadpe's example of selling the house before the end of the mortgage term. Interest payments are only related to the outstanding balance of the mortgage and the APR on the loan.