Stewart Brown Jr – Mortgage Loan Originator – Purchase or Refinance
| A 30-year fixed rate mortgage is a loan for buying a home whereby the interest rate and monthly payment are fixed throughout the life of the loan. In this case the term is 30 years at which point at the end of the term the loan will be completely paid off. Some borrowers opt for the more conventional 30-year versus the 15-year mortgage since it can allow them to purchase a larger home due to a lower DTI ratio when qualifying. In addition, rates on 30 year fixed mortgages are typically higher than 15 year fixed rate mortgages. |
| A 30-year fixed rate mortgage is a loan for buying a home whereby the interest rate and monthly payment are fixed throughout the life of the loan. In this case the term is 30 years at which point at the end of the term the loan will be completely paid off. Some borrowers opt for the more conventional 30-year versus the 15-year mortgage since it can allow them to purchase a larger home due to a lower DTI ratio when qualifying. In addition, rates on 30 year fixed mortgages are typically higher than 15 year fixed rate mortgages. |
| Depending on the borrower’s personal financial situation and long-term investment goals, a 15-year fixed mortgage could provide the homebuyer advantages. The main benefits of a 15 year fixed rate mortgage are: Shorter loan repayment, Less interest overall and the ability to build equity much faster than longer term loans. |
| Depending on the borrower’s personal financial situation and long-term investment goals, a 15-year fixed mortgage could provide the homebuyer advantages. The main benefits of a 15 year fixed rate mortgage are: Shorter loan repayment, Less interest overall and the ability to build equity much faster than longer term loans. |
| Before deciding if this loan structure is the best option for you, be sure to understand some of the drawbacks that can come with this type of mortgage. Those drawbacks include a higher mortgage payment, only qualifying for a smaller home and having less money on hand. Possibly the biggest hurdle for borrowers interested in a 15-year mortgage is the higher price month to month. Given the shorter timespan of the loan, each payment will need to cover more principal in their scheduled payments than if the amortization schedule was stretched out longer. As a result, the monthly payment on 15-year mortgages are substantially higher than a 30 year fixed, which might present a barrier for buyers on a tight budget. |
| Before deciding if this loan structure is the best option for you, be sure to understand some of the drawbacks that can come with this type of mortgage. Those drawbacks include a higher mortgage payment, only qualifying for a smaller home and having less money on hand. Possibly the biggest hurdle for borrowers interested in a 15-year mortgage is the higher price month to month. Given the shorter timespan of the loan, each payment will need to cover more principal in their scheduled payments than if the amortization schedule was stretched out longer. As a result, the monthly payment on 15-year mortgages are substantially higher than a 30 year fixed, which might present a barrier for buyers on a tight budget. |
| The main difference between the 15-year and 30-year mortgage is the length of time you will make payments for. In addition, you will pay substantially more interest over the 30 years than you would in 15 years. 15-year mortgages typically come with a lower interest rate than the 30-year. While monthly payments might be substantially higher, interest will be paid off sooner as the amount that goes towards the borrower’s equity in the property grows faster. However, opting for a 30-year fixed mortgage can greatly expand your homebuying options. By allowing you to pay off the loan for double the amount of time, lenders tend to provide financing for a more expensive home than they would for a 15-year mortgage. On 15-year mortgages, borrowers will qualify for a much lower loan amount which could narrow their buying options. |
| The main difference between the 15-year and 30-year mortgage is the length of time you will make payments for. In addition, you will pay substantially more interest over the 30 years than you would in 15 years. 15-year mortgages typically come with a lower interest rate than the 30-year. While monthly payments might be substantially higher, interest will be paid off sooner as the amount that goes towards the borrower’s equity in the property grows faster. However, opting for a 30-year fixed mortgage can greatly expand your homebuying options. By allowing you to pay off the loan for double the amount of time, lenders tend to provide financing for a more expensive home than they would for a 15-year mortgage. On 15-year mortgages, borrowers will qualify for a much lower loan amount which could narrow their buying options. |
| The main difference between a fixed- and an adjustable-rate loan is that the interest rate will never change for a fixed-rate mortgage. On the other hand, an ARM’s interest rate can change multiple times over the loan term. The monthly mortgage payment will change, too, if the index rises or falls. There are also a few other ways that ARMs and fixed-rate loans are different. Adjustable-rate loans also have margins and rate caps including initial, period and lifetime which fixed-rate mortgages do not have. Adjustable-rate loans are also tied to an index such as the SOFR which fixed-rate loans are not. If you have a slightly higher DTI ratio, you may have an easier time qualifying for an ARM than a fixed-rate mortgage. |
| The main difference between a fixed- and an adjustable-rate loan is that the interest rate will never change for a fixed-rate mortgage. On the other hand, an ARM’s interest rate can change multiple times over the loan term. The monthly mortgage payment will change, too, if the index rises or falls. There are also a few other ways that ARMs and fixed-rate loans are different. Adjustable-rate loans also have margins and rate caps including initial, period and lifetime which fixed-rate mortgages do not have. Adjustable-rate loans are also tied to an index such as the SOFR which fixed-rate loans are not. If you have a slightly higher DTI ratio, you may have an easier time qualifying for an ARM than a fixed-rate mortgage. |
| Homeowners who qualify to pay a higher amount each month or are looking to spend less in overall interest might decide to refinance to a 15-year mortgage. This choice could help reduce 15-year refinancing rates are typically the same as purchase interest rates, however lenders will often discount their interest rates on a purchase transaction in order to bring in new business. While lower 15-year purchase rates might indicate time to refinance, it’s not a guarantee that the decision would benefit your specific situation. Always check with your lender to see if refinancing makes sense not only from a rate perspective but also an overall cost perspective. |
| Homeowners who qualify to pay a higher amount each month or are looking to spend less in overall interest might decide to refinance to a 15-year mortgage. This choice could help reduce 15-year refinancing rates are typically the same as purchase interest rates, however lenders will often discount their interest rates on a purchase transaction in order to bring in new business. While lower 15-year purchase rates might indicate time to refinance, it’s not a guarantee that the decision would benefit your specific situation. Always check with your lender to see if refinancing makes sense not only from a rate perspective but also an overall cost perspective. |
| A 30-year fixed rate mortgage is the most popular option for homebuyers in different stages of life. For younger buyers, the longer repayment plan could mean allocating more of your paycheck towards saving for retirement or a child’s education expenses, granting even more financial flexibility, as well as the many benefits of homeownership. Owning a home can also provide a retirement safety net. Older buyers with established fixed income on a tight budget might decide to opt for a 30-year fixed rate mortgage in order to prioritize other life goals such as travel and taking advantage of continued tax benefits. |
| A 30-year fixed rate mortgage is the most popular option for homebuyers in different stages of life. For younger buyers, the longer repayment plan could mean allocating more of your paycheck towards saving for retirement or a child’s education expenses, granting even more financial flexibility, as well as the many benefits of homeownership. Owning a home can also provide a retirement safety net. Older buyers with established fixed income on a tight budget might decide to opt for a 30-year fixed rate mortgage in order to prioritize other life goals such as travel and taking advantage of continued tax benefits. |