It’s the crowd pleaser!
The 30 year fixed rate mortgage is the most popular mortgage, especially among first time homebuyers, and has been for quite some time. The 30 year fixed rate mortgage has become something of an American tradition, kind of like barbecuing in the summer and hot dogs at baseball games.
There are a variety of reasons that it’s so popular: its affordability, stability and flexibility.
The affordable and budget friendly 30 year fixed mortgage
Interest rates are typically higher on a 30 year fixed rate mortgage than for other shorter term mortgages such as a 15 year fixed mortgage, because of the inherent interest rate risk. Basically, you’re getting a mortgage at a certain interest rate for a whopping 30 years! Interest rates could really fluctuate during that time, so instead of experiencing this flux, you’re opting for a higher interest rate.
The beauty is, because you’re paying it off over 30 years, your monthly mortgage payments are likely to be lower as compared to other shorter-term mortgages. These low monthly payments are a big draw for first time homebuyers!
Also, because these monthly mortgage payments are fixed, as in never changing, it makes it easier for you to plan for the future and budget yourself accordingly.
Flexibility – Stretch it!
It’s important to note that you will be paying more interest on a 30 year fixed as compared to some other, shorter-term mortgages. The longer your mortgage term, the more interest you’ll pay. However, the 30 year fixed is flexible because it’s generally prepayable. This means that you can put more money towards your monthly mortgage payment, without any additional fees.
So if you’ve successfully paid off your car, why not start putting that money towards your mortgage? Consistently do this, and it brings down the amount of interest you pay on your mortgage, which means some wise savings.
If the 30 year fixed is sounding mighty interesting to you right, give us a call and let’s talk more about it!