Protect your budget with a consistent mortgage payment at a low rate that will stay the same through the life of your loan.
Common Types of Fixed Rate Mortgages
The 15-Year Mortgage
With a 15-year fixed rate mortgage, you will pay less in interest. If you borrow $100,000 to purchase a home at a 4% interest rate, paying over a longer period of time will mean more interest on the money borrowed. So, a 15-year mortgage can significantly cut down on the interest that you pay. Add to that the lower interest rates that are often available for 15-year mortgages and you could have some big savings available.
The trade-off is that your monthly payment will likely be higher. Even with the lower interest rate, you will probably have a slightly higher payment with a 15-year mortgage. This happens because you are paying more towards principal from the beginning. However, you will be mortgage-free in half the time, which is no small feat.
The 30-Year Mortgage
If you opt for a 30-year fixed rate mortgage, you will end up paying more in interest. A longer mortgage period means more interest charged, which is how banks and other lenders make their money. They loan you, the borrower, money and collect their interest over the 15 or 30 years it takes you to pay them back.
The advantage of a 30-year mortgage is that your monthly payment will likely be lower. Because you are spreading out your payments over a longer period of time, they will almost always be lower with a 30-year mortgage. If your monthly budget is tight, this may be a better way to go.
How It Works
- Monthly payments are based on interest rate, principal loan amount, and amortized interest over 30 years. With a fixed rate mortgage, your interest rate will never change, even if market rates increase!
- Your payment will not change throughout the life of the loan.
- Your actual payment will vary based on your situation and the current interest rates when you apply.
- You can typically pay your mortgage off at any time without pre-payment penalties.
Which Type of Fixed Rate Mortgage Is Best for You?
If you’re planning to stay in your home for a long time and want the peace of mind of consistent payments, a traditional 30-year fixed rate mortgage may be the best option. On the other hand, if you’re looking to pay off your mortgage faster and save on interest, a 15-year fixed rate mortgage may be more suitable.
Ultimately, the best type of fixed rate mortgage for you depends on your specific financial goals, preferences, and circumstances. That’s why we recommend consulting with an experienced mortgage professional at Successful Mortgage, who can help you navigate the options available and determine the fixed rate mortgage that aligns with your homeownership objectives.
If you have any questions about applying for a fixed rate mortgage, please don’t hesitate to contact us! Our mortgage specialists are always available to answer your questions and help you get started with the home loan application process.