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Fixed Rate Mortgage
There are several types of mortgages offered by lenders in the market.
The most common of these types is fixed rate mortgages. Fixed rate
mortgage loans are characterized by fixed rates and monthly payments
that are generally for a 15-year and 30-year periods.
Fixed rate mortgages are popular in the consumer market because of
its stability. Most consumers are hesitant to get house loans where
the rates fluctuate with the changing interest rates of the market.
Fixed rate mortgages are generally very affordable, especially when
rates are low.
Consumers of fixed rate mortgages are faced with having to choose
between a 15-year fixed rate mortgage or a 30-year fixed rate mortgage.
Some prefer 15-year fixed rate mortgages because of the shorter duration.
Other consumers choose 30-year fixed rate mortgages because the payments
are considerably lower than the former.
Each type of fixed rate mortgages certainly has its own advantages
and disadvantages. Here are some of them.
30-year Fixed Rate Mortgage – Advantages and Disadvantages
A 30-year fixed rate mortgage gives consumers the opportunity to borrow
money on a long-term basis. They do this without having to worry about
the change that might occur in fixed rate mortgage interest rates
or payments of such.
Because the interest of a 30-year fixed rate mortgage is amortized
over a longer period, the monthly payments for this are lower than
those on 15-year loans. Lower monthly payments on 30-year fixed rate
mortgages give consumers an extra resource which they can pour into
other worthy investments.
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"A miser grows rich by seeming poor. An extravagant man grows poor by seeming rich.”
- William Shakespeare
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On the other hand, this could also cause a slight disadvantage for
30-year fixed rate mortgage borrowers. The overall interest bill of
a 30-year fixed rate mortgage is much higher because of the long amortization
period. And because payments for 30-day fixed rate mortgages are usually
used to pay up the interest rather than the principal at first, borrowers
will be building up their equity at a slower pace.
The high interest rates of 30-day fixed rate mortgage loans do not
necessarily stop consumers from taking this type of loan. They reason
that higher interest bill for 30-day fixed rate mortgages increases
the amount they can deduct at tax time. This could potentially reduce
or perhaps, even eliminate their federal income tax liability.
15-year Fixed Rate Mortgage – Advantages and Disadvantages
One of the advantages that attract borrowers into taking a 15-year
fixed rate mortgage is the fact that amortization periods for this
type of loan are usually shorter. This allows 15-year fixed rate mortgage
borrowers to build equity much quicker. And with a 15-year fixed rate
mortgage, the overall interest bills are low – at least, considerably
lower than those of longer-term loans. Interest rates of a 15-year
fixed rate mortgage are also lower than 30-year loans.
The disadvantages however include significantly higher monthly payments,
especially when compared with 30-year fixed rate mortgages. This setback
of having a 15-year fixed rate mortgage may restrict home buyers to
smaller houses than they might be able to afford with longer-term
loans.
There are also other factors to consider when choosing which type
of fixed rate mortgage you want to take. Keep in mind that you can
actually do a prepayment for your fixed rate mortgage, that way, the
principal amount may be significantly reduced each month. In this
way, fixed rate mortgages may even be paid off sooner than the projected
term.
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Additional Resources and Latest News:
Mortgage rates lower for Wednesday Bankrate.comSeveral closely watched mortgage rates sunk lower today. The average for a 30-year fixed-rate mortgage decreased, but the average rate on a 15-year fixed ...
Mortgage rates move higher for Tuesday Bankrate.comSeveral benchmark mortgage rates rose today. The average for a 30-year fixed-rate mortgage were higher, but the average rate on a 15-year fixed dropped.
Mortgage rates rise for Monday Bankrate.comSeveral closely watched mortgage rates notched higher today. See what that means for you if you're in the market for a home loan.
Benchmark mortgage rate dips for Friday Bankrate.comMortgage rates moved in different directions today, but one key rate decreased. If you're in the market for a mortgage, see how your payments might be affected.
US mortgage rates fall to 10-month low NewsOK.comWASHINGTON — U.S. long-term mortgage rates fell this week to a 10-month low, spurring on potential homebuyers for the upcoming season. Mortgage buyer ...
Ford starts probe of gas mileage, emissions Chattanooga Times Free PressFord starts probe of mileage, emissions. Ford Motor Co. has launched an investigation into whether it overstated gas mileage and understated emissions from a ...
Home sales slump 1.2% in January Arkansas OnlineU.S. home sales fell 1.2 percent in January to their worst pace in more than three years, as persistent high prices have put a chill in the real estate market.
Mortgage Rates Drop, Credit Availability Rises National Mortgage Professional MagazineThe 30-year fixed-rate mortgage averaged 4.41 percent for the week ending Feb. 7, down from last week when it averaged 4.46 percent. The 15-year FRM this ...
Fannie Mae Lowers Several Forecasts Mortgage News DailyFannie Mae is predicting a notable slowdown in the growth of the U.S. economy in the first quarter of 2019. They have downgraded their earlier forecast by 0.1 ...
Are we falling short on shared ownership? Financial ReporterShared ownership is an important initiative for first-time buyers, and whilst there are many lenders looking to help homebuyers and intermediaries realise.
Foundation announce new five-year BTL deal Property ReporterSpecialist lender, Foundation Home Loans, has announced that it has launched a new five-year, buy-to-let product aimed at landlords who want rate certainty.
Mortgage rates fall for Tuesday Bankrate.comSeveral closely watched mortgage rates dropped today. If you're in the market for a home loan, see how that could affect you.
Why do we have a 30-year mortgage, anyway? Marketplace APMThe average interest on a 30-year, fixed-rate mortgage rose just a hair this week, to 4.86 percent. That's almost a full percentage point higher than this time last ...
5 types of mortgage loans for homebuyers Bankrate.comFor homebuyers, there are three basic types of mortgage loan options: fixed-rate, adjustable-rate and interest-only jumbo. Here's what to know about each loan ...
Mortgage rates continue their upward march The Washington PostMortgage rates moved higher for the fourth week in a row and show no signs of abating. According to data released Thursday by Freddie Mac, the 30-year ...
Key mortgage rates mixed for Tuesday Bankrate.comMortgage rates diverged today. The average for a 30-year fixed-rate mortgage was flat, but the average rate on a 15-year fixed receded. Meanwhile, the average ...
Investors give thumbs up to Boston Beer The Boston GlobeBoston Beer investors could crack a cold one Thursday. Shares in the brewer of Samuel Adams beers rose 14 percent to close at $306.75, not far from a record ...
Mortgage rates fall for Thursday Bankrate.comSeveral benchmark mortgage rates trended down today. See what that means for you if you're in the market for a home loan.
Mortgage rates settle in for the summer The Washington PostAfter a big jump to start the year, mortgage rates have settled in for the summer. According to the latest data released Thursday by Freddie Mac, the 30-year ...
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