Fixed rate mortgages offer stability where your monthly payments are always the same for the full life of the loan.

30 year fixed rate mortgages are popular with home owners who want to borrow more and pay a smaller monthly payment. However, it usually comes with a higher interest payment, and the borrower will end up paying more interest in absolute amounts for the life of the 30 year fix mortgage. The lender will charge a higher interest rate for taking on the risk of a locking themselves into a long 30 year term loan to you, because lenders don’t know where future interest rate will be either.

15 year fixed rate mortgages is for people who want the stability but can afford to pay a higher monthly payment, as well as finish repaying the loan sooner, while paying less in interest compared to the longer term 30 year fixed rate mortgages. However, it can create the issue of been cash poor and house rich since you are paying off your house at a faster rate.

Categories: Finance

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