Fixed Rate Mortgages
The primary feature of a fixed rate mortgage for a home loan is the interest remains stable over the life of the mortgage. This means that except for adjustments for taxes, the monthly payment is always predictable.
A 30 year fixed rate mortgage is the frequent choice of borrowers when they can secure a low rate by locking one. Since the principal is paid over 30 years, the monthly payments will be lower. Many people prefer having an interest rate that will not increase. The principal and interest payment remains constant over the 30 year period. Of course, if rates drop the fixed rate will not adjust to the lower rate.
A 15 year fixed rate mortgage may have a better rate because the loan will be paid off quicker. Since this loan is paid off faster, the equity increases at a faster rate. As with the 30 year fixed mortgage, the rates will not go up. They will not go down either if the rates fall.
The 15 year fixed requires a higher monthly payment because of the shorter amortization rate.
A 30 year fixed rate mortgage is the frequent choice of borrowers when they can secure a low rate by locking one. Since the principal is paid over 30 years, the monthly payments will be lower. Many people prefer having an interest rate that will not increase. The principal and interest payment remains constant over the 30 year period. Of course, if rates drop the fixed rate will not adjust to the lower rate.
A 15 year fixed rate mortgage may have a better rate because the loan will be paid off quicker. Since this loan is paid off faster, the equity increases at a faster rate. As with the 30 year fixed mortgage, the rates will not go up. They will not go down either if the rates fall.
The 15 year fixed requires a higher monthly payment because of the shorter amortization rate.