Many people are caught up in home modifications and refinancing, but there have been many who are simply looking to buy a home, in part due to the first-time homebuyer tax credit, or because they are at a point in life where they can afford to make a mortgage payment. So, with the wide variety of home mortgage loans available, is the old, traditional 30-year fixed rate mortgage going to be the best?
The question of what type of mortgage to get is on people’s minds when they begin to entertain the idea of becoming a homeowner. Obviously, the big draw on any mortgage is the interest rate, and for many people it’s the lower the better. A low interest rate that comes with a 30-year fixed rate mortgage, for those who qualify can bring a lower monthly payment as well, and this is a big draw for many.
However, looking at your situation and wants from a home will be a big part of what mortgage you get. A short-term homeowner may benefit from an adjustable-rate mortgage, but these can come with sudden increases in interest when the rate changes, but if you are looking at moving before that happens it may help.
A 15-year fixed rate mortgage comes with a lower interest payment than most mortgages, but a higher monthly payment. However you can get out of debt faster with this mortgage and you will save a lot of money over the long run.
If you buy an home an have decided that you are settled and have no intention of moving, then the 30-year fixed mortgage may bring the low interest and affordability you want and need. Keep in mind that a 30-year mortgage is going to cost more over the long run, thanks to interest, but it brings a monthly mortgage payment that is more affordable than a 15-year fixed or adjustable rate mortgage in most cases.
It’s vital that you look at your personal financial situation, short-term and long-term wants from a home, and any changes that may come down the road before deciding on a mortgage. Make sure you do the research on your options so you can get the best mortgage that is right for you.
