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Things To Consider When Choosing A Fixed Rate Mortgage

Sep 9, 2008
Considering whether you need a 30 or 15 year fixed mortgage rate is important for people looking to buy a home and concerned about their monthly payments. Of course the goal for most people with a mortgage is to pay it off early and save themselves a great deal of money in interest repayments. However, before you rush in and sign any papers, there are points to contemplate. Probably the most important point is a guarantee of a constant interest rate for the duration of the loan.

Avoid the mortgage loans offered by some lenders, those that sound unbelievable because they usually are. For loans that have 15 year fixed mortgage rates, the same amount of interest is maintained throughout the life of the loan. This is of great benefit for anyone that does not like surprises. My wife and I looked into the loans available with 15 year fixed mortgage rates when we were searching for a home for sale.

Our aim was to pay of the mortgage as soon as we could without getting into trouble with high monthly payments. 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. Too much pressure was placed on the early repayment of the mortgage loan.

It took some time but we finally chose to go ahead with the 30-year mortgage plan. Reaching the decision we did was the only one that made sense. The main reason was that I found out my wife was pregnant. As she intended to raise our child at home we couldn't rely on her financial income to the monthly expenditure. The financial commitment per month on the 15 year fixed mortgage rate was just too high. For us it just wasn't feasible as we would just be in over our heads. The monthly payments on a 30-year loan were quite a bit lower.

If we have spare cash throughout the year then we can use it to reduce the capital sum. If you make a handful of extra payments throughout a twelve-month period you can knock years off of your loan. This is well worth it in the long term but it does require some discipline. It was hard going against our preference for a shorter term, 15 year fixed rate mortgage, but we had to think about more immediate needs and abilities. All things considered, it all worked out for the best in the end.
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