This "traditional" type of loan maintains its original interest rate throughout the entire life of the loan. Any change in monthly loan payments will be due to increases in other charges like insurance or real estate taxes that naturally occur over time. Fluctuations in market rates over the term of your loan have NO impact on the amount of interest you pay because that rate is already "fixed." A Fixed Rate Mortgage loan may be a good choice if you:
- Want the security of knowing that your interest rate will not change and knowing the amount of your required monthly mortgage loan payment.
- Plan to stay in this home for several years.
- You don't expect your income to increase significantly in the coming years.
Fixed-rate mortgage loans come in various loan terms. In determining the length of your loan you may want to consider:
- The total amount of interest you want to pay throughout your loan
- For example, the total cost of a 30-year loan in terms of the interest paid on the loan is higher than the total cost of a 10, 15, or 20-year loan. With a 30-year loan, you have the advantage of lower monthly payments due to the longer loan term.
- With a 15-year loan, you have the advantage of repaying the loan more quickly with higher monthly loan payments.
- Your ability to make high monthly payments
- If you can afford to pay more per month, you reduce the number of months you have to pay. Also, choosing a 15-year term will save you thousands in interest charges vs. the typical 30 years.
Hint: Another option to decrease the amount of interest you pay is to get a 30-year loan (so you don't lock yourself into a higher monthly payment) and pay an extra amount each month towards the principal balance. Paying just $200 additional principal each month on a $300,000 loan reduces your loan term from a 30-year loan to a 23-year loan!
USDA 30 Year Fixed
| Best Choice If:You have limited funds for the transaction.
You plan on living in a rural location. | Advantages:You are not required to make any down-payment, and can even finance some of the closing costs onto the loan.
The program allows for lower credit scores than traditional financing.
No risk that changing market conditions will increase your monthly payments. | Disadvantages:This loan program is only available in limited, rural areas. |
15 Year Fixed - Home Ready
| Best Choice If:You plan on staying in the home long-term.
You need your monthly payments to remain fixed over the life of the loan.
You would like to pay-off the loan balance quickly. | Advantages:Level principal and interest payments for the full term of the loan.
No risk that changing market conditions will increase your monthly payments.
This product will pay-off the loan balance the quickest. | Disadvantages:Monthly payments are higher than a 30-year mortgage |
30 Year Fixed - Conforming
| Best Choice If:You plan on staying in the home long-term.
You need your monthly payments to remain fixed over the life of the loan.
| Advantages:Level principal and interest payments for the full term of the loan.
Allows for higher loan amount qualification and enhanced buying power.
No risk that changing market conditions will increase your monthly payments.
| Disadvantages:Benefits of the fixed rate are not realized until after the 10th year. (10/1 ARM is a better option if loan is paid-off within 10 years.)
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30 Year Fixed - Conventional
| Best Choice If:You plan on staying in the home long-term.
You need your monthly payments to remain fixed over the life of the loan.
| Advantages:Level principal and interest payments for the full term of the loan.
Allows for higher loan amount qualification and enhanced buying power.
No risk that changing market conditions will increase your monthly payments.
| Disadvantages:Benefits of the fixed rate are not realized until after the 10th year. (10/1 ARM is a better option if loan is paid-off within 10 years.)
|
30 Year Fixed - Home Ready
| Best Choice If:You plan on staying in the home long-term.
You need your monthly payments to remain fixed over the life of the loan.
| Advantages:Level principal and interest payments for the full term of the loan.
Allows for higher loan amount qualification and enhanced buying power.
No risk that changing market conditions will increase your monthly payments.
| Disadvantages:Benefits of the fixed rate are not realized until after the 10th year. (10/1 ARM is a better option if loan is paid-off within 10 years.)
|
20 Year Fixed - Conforming
| Best Choice If:You plan on staying in the home long-term.
You need your monthly payments to remain fixed over the life of the loan.
You would like to pay-off the loan balance quickly.
| Advantages:Level principal and interest payments for the full term of the loan.
No risk that changing market conditions will increase your monthly payments.
The loan balance will decrease more rapidly than a 30 Year mortgage.
| Disadvantages:Monthly payments are higher than a 30-year mortgage
|
15 Year Fixed - Conforming
| Best Choice If:You plan on staying in the home long-term.
You need your monthly payments to remain fixed over the life of the loan.
You would like to pay-off the loan balance quickly.
| Advantages:Level principal and interest payments for the full term of the loan.
No risk that changing market conditions will increase your monthly payments.
This product will pay-off the loan balance the quickest.
| Disadvantages:Monthly payments are higher than a 30-year mortgage
|
10 Year Fixed - Conforming
| Best Choice If:<You plan on staying in the home long-term.
You need your monthly payments to remain fixed over the life of the loan.
| Advantages:Level principal and interest payments for the full term of the loan.
Allows for higher loan amount qualification and enhanced buying power.
No risk that changing market conditions will increase your monthly payments.
| Disadvantages:Benefits of the fixed rate are not realized until after the 10th year. |
FHA 30-Year Fixed - Conforming
| Best Choice If:You plan on staying in the home long-term.
You need your monthly payments to remain fixed over the life of the loan.
| Advantages:Requires a smaller down payment than conventional financing.
Level principal and interest payments for the full term of the loan.
Allows for higher loan amount qualification and enhanced buying power.
No risk that changing market conditions will increase your monthly payments.
| Disadvantages:Benefits of the fixed rate are not realized until after the 10th year. (10/1 Conventional ARM may be a better option if loan is paid-off within 10 years.)
|
30 Year Fixed 97% - Conforming
| Best Choice If: You want would like to get into your home with a minimum down payment.
You need your monthly payments to remain fixed over the life of the loan.
| Advantages:Low down payment.
Level principal and interest payments for the full term of the loan.
Allows for higher loan amount qualification and enhanced buying power.
| Disadvantages:Benefits of the fixed rate are not realized until after the 10th year. (10/1 ARM is a better option if loan is paid-off within 10 years.)
|
FHA 15 Year Fixed - Conforming
| Best Choice If:You need your monthly payments to remain fixed over the life of the loan.
You would like to pay-off the loan balance quickly.
| Advantages:Requires a smaller down-payment than conventional financing.
Level principal and interest payments for the full term of the loan.
No risk that changing market conditions will increase your monthly payments.
The loan balance will decrease more rapidly than a 30 Year mortgage.
| Disadvantages:Monthly payments are higher than a 30-year mortgage
|
VA 30 Year Fixed - Conforming
| Best Choice If:You are eligible for a VA Loan program
You need your monthly payments to remain fixed over the life of the loan.
You plan on staying in the home long-term.
| Advantages:Under most circumstances, no down-payment is required.
Level principal and interest payments for the full term of the loan.
Allows for higher loan amount qualification and enhanced buying power.
No risk that changing market conditions will increase your monthly payments.
| Disadvantages:Benefits of the fixed rate are not realized until after the 10th year. (10/1 Conventional ARM may be a better option if loan is paid-off within 10 years.)
|
VA 15 Year Fixed - Conforming
| Best Choice If:You are eligible for a VA Loan program
You need your monthly payments to remain fixed over the life of the loan.
You would like to pay-off the loan balance quickly.
| Advantages:Under most circumstances, no down-payment is required.
Level principal and interest payments for the full term of the loan.
No risk that changing market conditions will increase your monthly payments.
The loan balance will decrease more rapidly than a 30 Year mortgage.
| Disadvantages:Monthly payments are higher than a 30-year mortgage
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