The concept of fixed rate loans have been around for generations.
In fact, your parents and their parents may have made use of these mortgages. In some cases, your parents might be still repaying one of these loans. After all, the fixed rate loans last for three complete decades. This makes them one of the longest mortgages in the market. And, you will be fixed on paying premiums for 30 years. Does this sound daunting?
So, why are fixed rate mortgages for 30 years famous? Does the loan offer lower down payments? Can the loan be customized to suit your need? Or, should you show signs of variable income for this 30-year loan?
Reducing Monthly Payments:
A major reason behind the advent and fame of 30-year fixed rate mortgage would be lower monthly payments. The lower monthly payment will help you stick to a budget. If you are planning to improve your current home by taking out a new mortgage, it is important to you have a mortgage payment you can afford and time to complete the project. No matter what your financial objectives are, making a home improvement is never simple or cheap.
Fortunately, the 30-year fixed rate loan will help you save some money. Shorter repayment loans will make you shell out more money each month. This doesn’t happen with fixed rate, 30-year loans. If you would like to compare shorter term mortgages to the 30 year fixed rate mortgage be sure to discuss your options with a knowledgeable mortgage professional.
Since the repayment needs to be done over 3 decades, you will be able to invest in additional properties. And, when you buy a second property, you may want to consider a shorter loan. Mortgage calculators will help you understand how much should be paid for both the properties.
Another interesting benefit in 30-year fixed rate loans would be more investments and savings. When your monthly budget on loan repayment is low, you will be able to build a bigger and better savings. In the long run, you can use your investments to repay and close the lengthy loan.
People with variable income are often inclined towards 30-year fixed rate loans. This includes the self-employed, people with commission based roles, and those who keep changing their jobs all the time (seasonal jobs). Those that receive variable income have to look forward when making financial decisions. When your financial income is unstable, it would be unwise to choose a shorter loan. Keep the loan as long as possible, and reduce your monthly installment to avoid penalties.
When you are doing great, try to add more money to your monthly installments. That way, you can close the loan quickly.
Length of Duration:
Are you planning to invest only on a single home? Is this going to be “your” home for the rest of your life? If yes, the 30-year fixed rate loan will be apt for you. On the other hand, people who intend to stay in the property for less than a decade should opt for a different type of loan. When the duration of ownership is less, a stretched payment schedule is not ideal. This is because a bigger interest will be paid.
When looking for a low rate 30 year fixed mortgage be sure to obtain two to three quotes from experienced Loan Officers at reputable mortgage companies.
A Mortgage For Just About Everyone:
There is a special loan for almost every borrower. It is important for you to understand your capabilities, and choose the right loan. For more assistance on how to choose a loan, talk to one of our skilled mortgage experts.
Loan Officer Kevin O’Connor
JB Mortgage Capital, Inc.
CA BRE #01499872 – NMLS #247447