Do Attractive 30 Year Fixed Mortgage Rates Make A 30 Year Mortgage Preferable To A 15 Year Mortgage

For many people, buying their first home can be a very exciting

, yet a very daunting proposition. Identifying the property that is to your liking and that you can afford is only half the job done. Arranging for the right source of funds to make your purchase constitutes another significant part of this activity. Finally, your job is complete only when you are able to wade through the maze of mortgage products available and negotiate the best deal for a mortgage product that best suits your needs.

If you are about to take out a home mortgage plan to purchase a house, you may like to get the best mortgage rates obtainable in the marketplace. Many prospective home owners in America plan for a 15 to 30 year time horizon to complete their mortgage payments and choose from various fixed rate or adjustable rate mortgage options that are available in the market. If you have a similar time horizon in mind to make your mortgage payments, you may like to obtain quotations on the category of mortgage of your interest when you are ready to compare between loans. If you wish to go for the fixed rate category of loans, you may for instance, like to compare 30 year fixed mortgage rates to those for a 15 year fixed rate mortgage. Irrespective of what the 30 year fixed mortgage rates might be in comparison to those for a 15 year fixed rate mortgage, your personal financial situation as well as your expected future financial situation may actually lead you to go in for the latter, if your payment horizon doesn't extend till the next 30 years. Whatever be your specific needs, it may well be advisable that you consult a mortgage broker who may be able to help you identify the mortgage plan that best suits your requirements.

You may like to choose between a fixed or a variable rate mortgage and both these type of loans have their advantages and disadvantages. While a fixed rate mortgage would mean that the interest rate on the loan would stay the same throughout the life of the loan, in the case of a variable rate mortgage, the rate would be linked to the base rate set by the Federal Reserve and may fluctuate over time. Whether you choose a fixed or a variable rate mortgage and irrespective of what the 30 year rate is, when compared to a 15 year mortgage, the monthly payments on a 30 year mortgage can be expected to be nearly half as much as on the 15 year mortgage since the payment period for the former loan type is twice that of the latter. However, going in for a 30 year mortgage would also mean that you end up paying interest on the loan for an additional period of 15 years and this may mean a huge amount of additional interest that you may need to pay.

While the monthly payments on a 30 year mortgage can be lower than those on a 15 year mortgage, through a 15 year mortgage, you shall be able to pay off your home loan much quicker. If a shorter loan term irrespective of the size of payments is what you prefer, then you may opt for a 15 year mortgage. But if keeping your monthly payments down is your primary concern, then a 30 year mortgage may suit your needs.

Whatever loan type you may wish to go for, it is always advisable that you check around for all the possible mortgage products available and evaluate between the best mortgage rates before you take your decision. After all making payments on a home loan would be a huge obligation that you will have to live with for a long time!

by: Ask Bill

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