30-Year Fixed Rate Mortgages can help you buy your dream house which you can pay for a lower repayment period. However, homebuyers will need to spend more on interest fees and a higher mortgage rate.
Want to buy your starter house this year? Then you might want to consider a 30-Year Fixed Rate Mortgage.
30-Year Fixed Rate Mortgages are easier to get qualified if compared to other home loan types, plus you only need to pay low monthly mortgages, making it an eye-candy for low-moderate income earners. Most 30-year mortgages have fixed interest fees and payments that you can pay off within 30 years.
Talk to your Texas mortgage lender and make sure to take note of the following advantage and disadvantages of a 30-Year Fixed Rate Mortgage before applying for a home loan.
Perks of a 30-Year Fixed-Rate Mortgage
- Easier to qualify. More homebuyers are qualified for a 30-year mortgage. For as long as you can show your lender that you’re financially stable, can pay for the down payment and can pay monthly mortgages along with other requirements they may ask for, you can get approved for a home loan.
- Flexible Repayment Terms. If you only have enough cash to pay the regular monthly payment, then you may do so. If, however, you wish to repay your lender quicker than 30 years, you can make extra payments.
- Predictable Rates. No one can be certain how the economy will be in the future. With a 30-year fixed rate mortgage, you won’t have to worry about interest fees increasing or not. Your rates will stay as is, giving you peace of mind.
- Lower Monthly Mortgage. 90% of homebuyers who uses a home loan to finance their home purchase choose 30-year mortgages due to their low monthly mortgage fees. This means you get to own a house even if what you can afford is low mortgage fees that you can pay within 30 years.
- Beefy Tax Deductions. Homebuyers can deduct interest fees out of their mortgage when filing taxes. This means you get to have a hefty tax deduction thanks to your longer mortgage term.
Good Read: Should I Pay Off My Mortgage?
Drawbacks of a 30-Year Fixed-Rate Mortgage
- Longer Debt. Since you financed your home purchase with a longer-term mortgage, this means you’ll have an ongoing debt of 30 years before you can finally say you’re a full-pledge homeowner.
- Higher Interest Fees. While 30-year mortgages allow you to make smaller mortgage payments, you’ll find that the interest rates are much higher than 15-year mortgages.
- Slow Home Equity Growth. Unlike 15-year fixed rate mortgages, the longer the home loan, the longer it takes longer for you to build home equity. This means if you plan on tapping your equity, you’ll need to pay off your lender more years before you can borrow against your equity.
Good Read: How to Build Equity: Own More of Your Home
- May Not Match Your Long-Term Goals. If you move around a lot or plans on moving to another house in the future, then 30-year fixed rate mortgages might not be the perfect one for you.
30-Year Fixed-Rate Mortgages may have its cons, but one can’t deny that it offers as an excellent financing solution to homebuyers who wants low mortgage fees and fixed interest rates. Before settling on any mortgage program, it’s best to think of your finances, what terms you’re comfortable with and which one can better meet your situation.