The 30-year fixed-rate mortgage has long been a popular choice for many American home buyers. While choosing this loan means paying back the mortgage in a longer time frame (for 30 years), it comes with a lower monthly payment that appeals to many buyers who can’t afford the proposed monthly payment for a 15-year fixed-rate loan.
If you are thinking of choosing a 30-year fixed-rate loan, it only pays to learn more about this mortgage, as well as its pros and cons.
Is this right for you?
This is ideal for those who want the security that comes with fixed-rate mortgages. In most cases, such loans are more expensive than adjustable-rate mortgages, but they offer payment stability and are easier to understand. This may be a good choice for you if you can afford it and intend to live in your home for more than 10 years.
What will my payments be?
Your monthly payments will remain the same throughout the life of the loan. Mortgage companies in West Jordan note that despite changes in market trends, your payments will not increase or decrease.
What are the risks I should know about?
In general, fixed-rate mortgages are considered risk-averse. This is mainly because your payments will remain the same despite market rate changes. The one risk you should take is when the rates significantly fall; you will have to refinance to take advantage of these low rates. You should also know that 30-year fixed-rate mortgages have a higher total interest cost, as you are paying back the loan in a longer time frame.
What are the advantages?
The main attraction of fixed-rate mortgages, in general, is that there won’t be any adjustments in your monthly payment. This will enable you to manage your expenses and budget better since you know what your payments every month will be.
While the 30-year fixed-rate loan is the favored option, you should also consider its less popular counterpart, which is the 15-year fixed-rate loan. While this comes with a higher monthly payment, you can pay less in total interest cost and build equity faster. Talk to a reputable lender to learn more about your options and make an informed decision.