Is A Mortgage 30 Year Fixed My Best Option?

One of the many options when thinking about buying a home is the mortgage 30 year fixed, which means that you get a fixed rate mortgage, or an interest rate that will stay the same throughout the life of the loan for a period of thirty years, which is an extremely common interest rate for mortgages. The nice thing about a fixed rate mortgage is that no matter what happens to the interest rate over time, yours will stay the same. The payments will also be the same, except of course for the last payment. This makes it easy to budget since you always know what your mortgage payment will be.

There are other options for mortgages of course, but many choose the fixed rate. There are also different terms. You can get a 10 year or 15 year fixed rate if you think that you can handle the payments and want to pay off your home sooner, to sell it and move into a bigger one. There are also variable rate mortgages which are offered yearly or a number of years. This means that the interest rate will change to reflect the financial index every year or every five years, or whatever you choose the period of the adjustable rate mortgage to be.

Some people prefer not to go with fixed mortgages because a fixed mortgage doesn’t give them any opportunity to take advantage of interest rates should they fall quite a bit in the future. If you have a handle on the financial scene and you are expecting mortgage interest rates to drop in the future then you may want to go with a different type of mortgage. Fixed rate mortgages are best for people who aren’t sure about the financial market and how interest rates will be affected. Of course, if you have a financial adviser you may rely on his or her advice about interest rates.

One thing to consider about the term of the loan is the amount of money that you will pay over time. A 30 year fixed mortgage looks appealing because the payments are much lower, but over that extra fifteen or twenty years you could be paying tens of thousands of dollars more than you should. If you can handle the higher payments for a ten or fifteen year mortgage then you may want to consider it, because of the actual cash money that you’ll save in the long run. For instance, even a one percent interest rate differs by $15,000 on a $100,000 house from fifteen years as opposed to thirty.

Of course, the payment on a ten year mortgage or a fifteen year may be more than most can afford. If that is the case then it is alright to go with a thirty year mortgage. If you don’t have to give an arm and a leg to pay it off early then you may refinance when your wage increases or if you are a business owner, when your business takes off. A thirty year fixed rate mortgage is a common place type of mortgage and you can often get financed easier for a longer term than you can for a shorter one with higher payments, so if your credit is shaky you may want to go with a longer term regardless.