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Fixed Rate Mortgage 30/15
What Is A Fixed Rate Mortgage?
There are several types of mortgages offered by lenders, but the most common are Fixed Rate Mortgages. Generally, these loans are popular because consumers choose fixed rates because they don’t want their house payment to rise and fall with Interest rates. They also choose these loans because whenever rates are low, the fixed Rate mortgages are very affordable. A Borrower who chooses a Fixed Rate Mortgage has two options: 15 year or 30 year loan. Which one is better for you?
30 year fixed Rate Loan
There are a few advantages and disadvantages of choosing a 30 year fixed rate loan. A 30 year fixed rate loan presents borrowing money on a long-Term basis without having to worry about interest rates or payments changing. The interest is amortized over a longer period of time; therefore, making the monthly payments lower than those on a 15 year loan. Another advantage would allow borrowers to have lower monthly payments so that they could use the extra money to pour into investments that yield more than their homes. Also, a higher interest bill increases the amount consumers can deduct at Tax time, potentially reducing or eliminating their federal income tax liabilities.Unfortunately, there are a few disadvantages of choosing a 30 year fixed rate loan. During the first several years, Equity is built at a very slow pace because payments go largely toward interest rather than Principal. Another disadvantage is that the long Amortization term causes the overall interest bill to be much higher. Also, the interest rates are higher than on 15 year loans.