The most common mortgage type is a fixed rate mortgage. These loans feature fixed rates and monthly payments, generally for 15-year and 30-year periods. Compare lenders to find the best fixed rate mortgage available.
The fixed rate mortgage is popular because: 1) Consumers don't like the thought of their house payment rising and falling with interest rates, and 2) whenever rates are low, fixed rate mortgages are very affordable.
Fixed rate loan borrowers face one major choice: 15 year or 30? For some, a 30-year loan makes more sense (lower monthly payments) . For others, a 15-year loan does (less money paid towards interest).
Utilize the comparison guide below to find the best fixed rate mortgage. The pros and cons of each are below:
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30 Year Fixed |
|
| Pros | Cons |
| Offers borrowers the
chance to borrow money on a long-term basis without having to worry
about the interest rates or payments changing.
Monthly payments are lower than those on 15-year loans because the interest is amortized over a longer period. Lower monthly payments free up money that borrowers can pour into investments that yield more than their homes. Higher interest bill increases the amount consumers can deduct at tax time, potentially reducing or eliminating their federal income tax liability. |
Borrowers build equity at
a very slow pace because payments during the first several years go
largely toward interest rather than principal.
The overall interest bill is much higher because of the long amortization term. The interest rates are higher than on 15-year loans. |
|
15 Year Fixed |
|
| Offers borrowers the
chance to borrow money on a long-term basis without having to worry
about the interest rates or payments changing.
Borrowers build equity much more quickly due to shorter amortization schedules. Overall interest bills are dramatically lower than those on longer-term loans. The interest rates are lower than 30-year loans. |
Monthly payments can be
significantly higher than those on 30-year loans.
Restricts home buyers to smaller house than they might be able to afford with longer-term loans |
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