A house is made of walls and beams, while a home is built with love and dreams. Both house and home have one ingredient in common, however, and that is mortgage. If your house is the substance your dreams are made of, mortgage payments may be fodder for several nights’ worth of nightmares.
In home loan lending, loan term refers to the period over which you must make payments. Different loans have different terms. The safest term to go for is fixed-rate mortgage. Under this type, your monthly mortgage payments do not change over the life of your loan. You may take your pick from a multitude of terms, such as 5, 10, 15, 20, 25, and 30 years. This article will focus on the merits of getting 30-year mortgage rates.
Advantages of Getting 30-Year Mortgage Rates
A 30-year mortgage is the granddaddy of all home loans in home loan lending. As a rule of thumb, the longer the loan term, the lower the monthly payments. If you get 30-year mortgage rates, your monthly dues will be so affordable you will have more disposable income for your living expenses. Furthermore, you will be able to funnel more money towards your savings for retirement, tuition, or whatever purpose you have in mind.
The good thing about having extra cash is that you may use it to make additional payments on your mortgage balance. This will help shorten the term of your loan.
Another benefit of availing of 30-year mortgage rates is that it is easy to get a loan approved if it comes with longer terms. In fact, with longer terms, you may even be able to get a larger or finer house. In home loan lending, long-term loans are often perceived as more stable compared to short-term loans.
Advantages of Fixed Rate Mortgage
Fixed rate mortgage, particularly those involving 30-year mortgage rates, are recommended because:
1. you know exactly how much you will be repaying every month, for the next 30 years. This makes budgeting easy.
2. even if rates skyrocket, your rate is locked in for the next 30 years. Your monthly repayments will always be the same.
3. you do not have to remortgage every two or three years.
Disadvantages of Fixed Rate Mortgage
Admittedly, 30-year mortgage rates are not without their drawbacks. Some believe getting 30-year mortgage rates is not in their best interest because:
1. if mortgage rates fall, the fixed rate given to you will be higher than prevailing rates.
2. fixed rate mortgages generally require you to pay an arrangement or booking fee.
3. longer-term fixed rate mortgages require early repayment charges during the duration of the fixed period.
The decision to go for longer-term fixed rate mortgages is one you should make with care. Prudence and well-timed monthly payments can be the two things that separate the house-rich from the homeless.