September 28th, 2018 8:51 AM by Jackie A. Graves, President
Thirty years can sound like a lifetime when
you're talking with your lender about getting a 30–year fixed–rate mortgage.
There are so many uncertainties in life and who knows where you'll be in 30
years. Will you switch careers? Will you move cities? Will you have children?
may be a long period of time with many unknowns, but a 30–year mortgage
provides you with many certainties:
Lower monthly payments. Because
your loan is stretched out over a 30–year term, you have more time to repay
your loan, making your monthly payments more affordable and sustainable.
30 years, virtually everything around you will cost twice as much as it does
today, assuming a 2% inflation rate. Yet, your monthly mortgage payment (minus
taxes and insurance) and interest rate will remain the same as the day you
locked in your loan — guaranteed. This provides your family with a level of
security and predictability that's hard to find in today's world.
You can choose to pay–off your loan faster by adding to your monthly payments —
without penalty in most cases.
Easier to Qualify.
With the more affordable monthly payments that come with the longer term, you
may qualify more easily than loans with smaller terms.
Your monthly mortgage
payment and interest rate will remain the same as the day you locked in your
loan -- guaranteed.
all the benefits that come with a 30–year fixed–rate mortgage, there are
important considerations to keep in mind.
You'll likely have a higher
interest rate as the bank is taking a risk by locking you in at today's rates
for three decades.
Because of the longer term and
higher rate, it will take you longer to build up equity and you'll pay more in
interest over the life of the loan.
Your interest rate won't change
if rates go down. Your rate is locked in and will remain the same for the
duration of your term.
that you obtain the mortgage that's right for you, it's important that you talk
with your lender. Also, be sure to visit My Home by
Freddie Mac® to learn more about
homeownership and the homebuying process, from A to Z.
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