FIXED RATE OPTIONS
What is a Fixed Rate Mortgage?
A Fixed-rate mortgage is the most common mortgage for many homebuyers because the monthly payments are stable. The interest rate you lock-in will be the same interest rate you pay for the life of the loan.
Benefits of a Fixed Rate mortgage:
Inflation protection – If interest rates rise, your mortgage and your mortgage payment are fixed and won’t be significantly affected. Even if your taxes or insurance costs go up over time, your basic loan payment (principal and interest) will stay the same. This is especially helpful if you plan to own your home for five or more years. Long-term planning – You know what your monthly housing expense will be for the entire life of your mortgage. This can help you plan for other expenses and set long-term financial goals for you and your family. Low risk – You always know what your payment will be, regardless of what current interest rates are. This is why fixed-rate mortgages are so popular with first-time buyers. Your mortgage interest rate won’t go down, even if interest rates drop, unless you refinance your mortgage. Because the interest rate is usually higher than other types of mortgage loans, you may not qualify for as large of a fixed rate mortgage as you might with an adjustable. Your total monthly payment can occasionally increase based on changes to your taxes and insurance. In many cases you pay these costs through an escrow account that we establish for you.
10 Year Mortgage
With a 10-year fixed-rate mortgage you will pay off the loan in one third of the time it would take to pay off the traditional 30-year fixed-rate mortgage. This shorter term makes it possible to build up equity in your home faster, which can let you move up more quickly to a more expensive home or, save more in preparation for retirement or a child’s education. This loan is particularly attractive if you’re refinancing your mortgage because you can shorten your loan term plus enjoy a lower interest rate. 10 year mortgages are usually offered at interest rates lower than those available for 30-year mortgages. However, higher monthly payments may make it more difficult to qualify for the 10 year fixed-rate mortgage compared to the 30 year fixed-rate mortgage.
A 10 year mortgage offers a lower interest rate than a 30 or 20 year mortgage. This will save you a significant amount of interest over the life of the loan. For example, with a $100,000 loan at 6.00 percent interest, the 10 year mortgage will save you $86,614 in interest payments over the life of your loan when compared to the same mortgage amount for a 30 year term. However, your monthly mortgage payments will be higher. The shorter-term allows you to own your home free and clear sooner.
15 Year Mortgage
With a 15-year fixed-rate mortgage you will pay off the loan in one third of the time it would take to pay off the traditional 30-year fixed-rate mortgage. This shorter term makes it possible to build up equity in your home faster, which can let you move up more quickly to a more expensive home or, save more in preparation for retirement or a child’s education. This loan is particularly attractive if you’re refinancing your mortgage because you can shorten your loan term plus enjoy a lower interest rate. 10 year mortgages are usually offered at interest rates lower than those available for 30-year mortgages. However, higher monthly payments may make it more difficult to qualify for the 15 year fixed-rate mortgage compared to the 30 year fixed-rate mortgage.
A 15-year mortgage offers a lower interest rate than a 30 or 20 year mortgage. This will save you a significant amount of interest over the life of the loan. For example, with a $100,000 loan at 6.00 percent interest, the 15-year mortgage will save you $63,900 in interest payments over the life of your loan when compared to the same mortgage amount for a 30 year term. However, your monthly mortgage payments will be higher. The shorter-term allows you to own your home free and clear sooner.
20 Year Mortgage
With a 20 year fixed rate mortgage, you will pay off the 10 years earlier than for a traditional 30 year fixed-rate mortgage and save interest over the life of your loan. As with all fixed-rate mortgages, the interest on your loan never changes, bringing you peace of mind that principal and interest payments will remain level over time. However, higher monthly mortgage payments may make the 20 year fixed-rate mortgage more difficult to qualify for compared to the 30 year fixed-rate mortgage.
A 20-year mortgage offers a lower interest rate than a 30 year mortgage. This saves you a significant amount of interest over the life of the loan. For example, with a $100,000 loan at 6.00 percent interest, the 20 year mortgage will save you $43,800 in interest payments over the life of your loan, compared to the same mortgage amount for a 30 year term. However, monthly mortgage payments will be higher. The shorter-term allows you to own your home outright sooner.
30 Year Mortgage
The most popular type of mortgage, the 30-year fixed-rate loan is most appealing to borrowers who want to stay in their homes for a long period of time and who want to enjoy consistent interest payments during this period. Other benefits include keeping housing expenses to a minimum while maximizing mortgage interest deductions for income tax purposes.
This mortgage can require a low down payment, sometimes only 3 or 5 percent. Payments are stable, your monthly mortgage payment will not increase. Taxes, insurance and homeowners fees may change but your principal and interest payment will remain constant. The 30-year fixed-rate mortgage provides maximum interest deduction for tax savings.