/ |
|
With a Fixed Rate mortgage, you receive an
interest rate that remains constant throughout the term of the loan.
Some people find set payments easier to manage, and the fixed loan
provides the stability for which they are looking.
30 Year fixed rate
The 30 Year fixed mortgage is the backbone of the mortgage financing
industry. With this mortgage the interest rate you receive remains
the same throughout the term of the loan. Of course, you have the
option to refinance should interest rates lower over time. See Refinance
for more information.
Loan Type: |
30 Year Fixed Rate Loan |
Definition: |
The interest rate and payment do not change
over the 30 year repayment period. |
Benefits: |
Principle and interest payments never increase
because the rate is fixed (it stays the same) over all 30
years. |
Drawbacks: |
The equity in your home will take a long
time to buildup. |
| Note: |
This is the most popular mortgage in the
US, and a good choice when rates are low or you will be in
staying in the home for more than 5 years. |
15 Year fixed rate
The 15 Year fixed mortgage is mostly used by people who want to
build equity in their home more quickly and pay off their mortgage
in a shorter period of time.
Loan Type: |
15 Year Fixed Rate Loan |
Definition: |
The interest rate and principle and interest
payments do not change over the 15 year repayment period |
Benefits: |
Typically you can obtain a lower interest
rate than the 30 year fixed rate loan, plus less interest
is paid because the loan is paid off sooner. Another benefit
is that the equity in your home is built up quicker because
you are amortizing your loan over a shorter period.
Drawbacks: You will have higher monthly payments. |
Drawbacks: |
You will have higher monthly payments. |
Note: |
This loan is a good option for people who
can manage the higher payments and want the shorter pay-off
time. |
|
|
|
