30-Year Fixed Mortgage Overview
What Is A 30-Year Fixed Mortgage?
A 30-year fixed mortgage refers to a mortgage with a fixed, fixed rate of interest for 30 years. Fixed mortgages of 30-years are very popular and popular with first-time homebuyers.
Your monthly payment for a 30-year fixed mortgage will remain the same each month for 30 years. However, throughout the life of your loan, the breakdown of what percentage of your mortgage payment goes towards principal and interest will change. This is because the payments will be spread out over 30 years, with principal and interest-paying the largest portion.
Benefits Of A 30-Year Fixed Mortgage
It is easier to budget the remainder of your monthly expenses, as your mortgage payment is the exact same every month.
Lower monthly payments than other mortgage products
If you intend to live in your home for a long time or indefinitely, the 30-year period is better.
Your mortgage payment will be lower than usual, which means you have more cash to cover any emergency or pay off higher-interest debt. You can also use the money to diversify your investments.
Locking in a low rate fixed rate is a good idea when rates are low.
A 30-Year Fixed Mortgage's Disadvantages
Higher interest rates than fixed-rate mortgages and shorter-term fixed mortgages.
Refinances and home sales are common before the 30-year term ends.
It is not easy to build equity quickly at the beginning of your loan.
A 30-year fixed mortgage does not usually have pre-payment penalties. This means that you can pay off your mortgage faster and contribute more money to the principal without being locked into a longer-term fixed loan.
