All About The 15-year Fixed Mortgage
All about the 15-year Fixed MortgageWhen buying a home
, you need to decide between a 15-year fixed mortgage and a 30-year fixed mortgage. "Fixed" means that the interest rate stays the same throughout the life of the loan. In the case of a 15-year fixed mortgage, many choose this option because it enables them to have the loan paid off as soon as possible. There are many advantages to paying off as soon as you can, one of which is the fact that you will save money. Make sure the loan is fixedWhatever you do, you need to ensure that the loan is fixed and not variable rate. A variable rate mortgage is one in which the rate changes over time. As the base interest rate set by the Federal Reserve fluctuates, so does the rate of the loan. This can result in the payments being too high for a person to make. This very phenomenon caused issues within the housing market recently and has more people looking for fixed rate mortgages even if the payments are higher starting out than what they would be with a variable rate mortgage. So make sure you ask questions regarding your mortgage to make sure the rate is fixed the way you need it to be. AdvantagesThe advantages of a 15-year fixed mortgage are quite evident. First of all, you will be able to pay the home off much quicker. You can own your home in 15 years rather than 30. Second of all, you will save thousands of dollars in interest. The interest accumulates over the life of the loan. With 15 years being half of 30, you will cut the amount of interest that you pay by 50%. It can be rather staggering as to how much money is paid in interest over the life of a loan. However, you must keep in mind that a shorter loan means higher payments. When you're paying something off in half the time you normally would, you can expect the monthly payment to be twice as high. If you are able to do this over a 15 year period, then that is great. If you are not able to, you do have the 30 year mortgage to turn to in order to keep the payments down, but you will pay more in interest in the long-term. OptionsEven if you would choose a 30-year mortgage now rather than a 15-year mortgage, you can refinance your home at any time and refinance for a shorter period of time. Some individuals will do this when they feel that they are ready for the higher monthly payments and want to pay off their home quicker. You can either refinance for the entire worth of your home and receive a loan from the equity or you can refinance for the amount you have left on your 30-year fixed mortgage and pay your home off in 15 years for less than if you were to have a loan for the entire home value for 15 years. Furthermore, your 15 year payment may be less than what it would have initially been when you first took out your loan.
All About The 15-year Fixed Mortgage
By: Gen Wright
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