Home » Finance » Mortgage

An Understanding Of 15 And 30 Year Mortgages

Jun 20, 2008
Mortgages are very common these days but the way they work still confuses people or perhaps it is preferable to say that most people only think they know what one is. The worst thing to call a mortgage is home loan and while this expression is in common usage, it is totally incorrect. A mortgage is a secured debt using the property that is being purchased as the security for the debt until it is fully repaid. However, it is easier to explain it as a legally binding document where the lender is protected from loss by using the property as security for the debt.

Mortgages have in fact changed the face of house buying because they provide the facility for the purchase without the buyer paying the full cost upfront. To help understand how this works, some important information is discussed here. The problem arises because so many people refer to the buyer as the Borrower and the financier as The Lender which leads people to believe that the money has been loaned which is not the case. The security is in fact a lien which means the mortgagee has legal possession of your property until the debt is repaid.

This system works so successfully because the risk of loss on the part of the mortgagee is all but eliminated as they have legal possession of the property until the debt is completely repaid. Being a legal contract, the lien will be lodged within the records at the county or city courthouse (or a similar public office). So while the property is recorded as yours, there is an interest in its ownership which cannot be altered until the debt is paid off. Even if your property is mortgaged, you still own the property wholly and completely and nobody else, not even the mortgagee has title to the property.

The mortgage is a surety for the benefit of the mortgagee, so should the debt remain unpaid then the amount owed can be reclaimed by the sale of the property. This process has many names and in the United States it is referred to as foreclosure but this does need to go through the courts. To ensure that everything is legal and above board, the court will place a ruling on the disposal in a process called judicial foreclosure. This is the subject in brief and while there is a great deal more to it, perhaps this will help to clear up any ambiguities you may have previously experienced.

The monthly payments for 30 year or 15 year fixed mortgages are the main considerations for many people who are looking to buy a home. Many of us are buying homes later in life these days as they are usually in a better financial situation to make payments. Before you commit yourself and sign any documents, there are points you need to think about. It is always a good idea to confirm that the interest rate does not alter during the term of the mortgage. Alot of banks who gave Adjustable Rate Mortgages are now having to forclose on the properties.

If you are offered a deal that appears to be too good to be true than it probably is. A 15 year fixed rate mortgage means the interest rate remains stable for the life of the loan. This is of great benefit for anyone that does not like surprises. Both my wife and I decided to research fixed rate mortgages when we started looking at homes for sale.

It was always our intention to pay off our mortgage debt as early as we could and we didn't want to over extend ourselves at the same time. This meant we had to consider 30 year fixed rate mortgage plans as well as those of 15 years. Because we didn't still want to have a mortgage close to retirement, we hoped we would be able to afford a shorter 15 year fixed rate mortgage.

After careful consideration we decided to take the longer term 30 year repayment option instead of the 15 year plan. Although a number of things had to be pondered over, eventually the choice was made for us. The most important point was the fact we discovered we were having a baby. Because my wife wanted to be at home to raise our child, her income would not only be uncertain but also irregular. Loans that were based on 15 year fixed mortgage rates required a much higher monthly payment. We could see the financial problem of getting in too deep even though there were benefits to a shorter loan period. Despite the trepidation of having a longer term loan, it did reduce the repayments considerably and we felt alot more comfortable with that.

We figured if we had any spare cash throughout the year then we could use it to reduce the principal balance. If you make a handful of extra principal payments throughout a twelve month period you can knock years off of your loan and drastically reduce the interest you will pay on the life of the loan. This may be difficult for some, but well worth the effort a few years down the lroad when you see how much lower your balance is. Although we would have much preferred a loan with a 15 year fixed mortgage rate we determined with the advent of our increasing family, a 30 year rate was better, and everything has worked out great going this route.
About the Author
Visit Kay Brown's Net Reports, where you will find free niche articles along with PLR and PLR Products that are explosivley viral, branded strictly to you, to bring you income!
Rating:
Please Rate:
(Average: Not rated)
Views: 378
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources