The current real estate market is enjoying low interest rates just like what is happening in other business establishments. That is why most home mortgages that are being issues come in fixed terms. Most potential home owners prefer to enjoy low interest rates for the entire term or duration of their loan; thus, they proceed in taking advantage of this kind of mortgage term. If you have made up your mind that you would rather go with fixed mortgage rates than the variable mortgage rates, you proceed in applying for one. If you are eligible for this kind of mortgage, you then proceed in choosing the most suitable fixed mortgage term depending on your needs, situation, and/or conditions. Here you can find a brief discussion of the varying fixed mortgage terms that you can choose from for you to better decide which one you should be going for.
1. 15 years or less
This fixed-term mortgage is the shortest term among the others and offers the most benefit in terms of interest rates with its interest rates being always lower than those of the other types. You will be paying lower for your total payments with lower interest rates and having fewer payments in less years. Asset accumulation will grow faster and your payments will be able to pay much faster your principal mount rather than just pay for your interest rates. However, not all people are easily eligible for this fixed mortgage term. To qualify, you must have a higher income, other assets, and have less overall debt. Furthermore, you will be paying higher monthly installment payments at a shorter period of time.
2. 20-25 years
This particular fixed-term mortgage is considered as the in-between of the shorter mortgage term (i.e., 15 years or less) to the longer mortgage terms (30 years or more). That being said, if you compare the interest rates of this mortgage term from the shorter term, they are a bit higher; however, compared with the longer mortgage terms, they have much lower interest rates.
3. 30 years
Among the different fixed mortgage terms, this term is the most common one being chosen by potential home owners. Even if the interest rates can be higher than the abovementioned two terms, they are still low, generally speaking. This is the best option for most qualified individuals who are in need of buying a home but need to get an ideal financing option since the prices of most houses are increasing.
4. 40 years
The last fixed mortgage term was nonexistent decades ago. It was only just recently where this extended mortgage term has been introduced into the mortgage market. With this particular fixed mortgage term, you can extend the number of years to repay the house that you have bought with lower monthly installments. However, your overall payment will also most likely go up. This is a good deal for potential home owners who are having a difficult time qualifying to apply for a good mortgage loan.
As you choose which fixed mortgage term suits you best, just do not forget to look into a number of factors such as your comfort zone, financial capacity, overall costs versus expenses, and the monthly payments. So, which fixed mortgage terms do you intend to choose now?