Fixed-Rate
Mortgage Loans
The
interest rate may be your main consideration if you expect to stay in
your house for a long time. With a fixed-rate mortgage, you can be sure
that your interest
rate will stay the same for the entire life
of your loan. Fixed-rate mortgages are available in a variety of repayment
terms, with 15, 20, and 30 years the most common.
30-Year
Fixed-Rate Mortgage Loan
The
easiest fixed-rate loan to qualify for, the 30-year mortgage gives you
an excellent opportunity to keep your mortgage payments reasonable by
making monthly payments over a long period of time. This mortgage loan
may be ideal if you plan to remain in your home for years and wish to
keep your housing expense low and use any extra cash for other purposes.
This loan also provides maximum interest deduction for tax purposes.
20-Year
Fixed-Rate Mortgage Loan
The
20-year mortgage gives you the opportunity to own your home free of
debt much sooner than the 30-year mortgage loan. It often offers a lower
interest rate compared to a 30-year loan. This mortgage amortizes
principal and interest over a 20-year period, 10 years less than the
traditional 30-year mortgage. This may save you a considerable amount
of total interest paid over the life of the loan.
15-Year
Fixed-Rate Mortgage Loan
The
15-year mortgage offers a lower interest rate than a 30-year or 20-year
mortgage. Such a shorter-term mortgage will save you a significant amount
of interest over the life of the loan. By paying off the mortgage more
quickly, you also build up equity in your home sooner. A 15-year mortgage
can let you own your home clear of debt earlier, which may be important
if you are approaching retirement or have other large expenses to cover
such as financing your children's education. However, the monthly payments
you make on a 15-year mortgage will cost you more than those you would
make on a 30-year or a 20-year mortgage loan for the same total mortgage
amount.
