what is a Fixed Rate Mortgage
For many home buyers, the only real decision they have to make is whether to have a 15 or 30 year fixed mortgage rate? Buying a home later in life means that many people want to have the mortgage paid off early. There are always things to take into account before signing documents. Over the period of the loan, it’s important to remember to make sure the interest rate remains the same.
Steer clear of lenders that are offering unbelievable deals because they probably are. Loans agreed with a 15 year fixed mortgage keep the same interest rate throughout the entire life of the agreement. This is of great benefit for anyone that does not like surprises. My wife and I had already decided to research long term fixed mortgage rates when we started looking at homes for sale.
Even though it was important for us to pay off our loan at the earliest possible opportunity, we didn’t want high, unrealistic monthly payments which we would have trouble maintaining. Considering longer term fixed rate mortgages was one option if we could not afford a 15 year plan. Still, having a mortgage close to retirement wasn’t what we were looking for, so we decided to try for a loan with a 15 year fixed mortgage. We felt that there was a great deal of emphasis on paying the mortgage off early.
Taking everything into account we finally went for the easier 30 year mortgage plan instead. There were many things that factored into this decision. Discovering my wife was having a baby was the most important reason. My wife was going to raise our child from home so her addition to the monthly income would be restricted. The problem we could see was the increased financial commitment on a monthly basis if we had opted for the 15 year fixed mortgage rate. We just decided we would probably get into trouble if we took this route. The monthly payments on a 30 year loan were quite a bit lower.
Making a few additional lump sum payments during the year helps bring down the amount owed. It is possible to take years off your loan if you can make a few extra payments during each year. Although this isn’t easy to achieve, in the long term it is well worth it.
In the long term, this is a strategy well worth pursuing if you are able. Our desire for a 15 year fixed rate mortgage was second place to our more immediate needs. Things worked out well anyway, even though we were unsure about it to start with.
