What to Look Out For in a Fixed Rate Mortgage
For many home buyers, the only real decision they have to make is whether to have a 15 or 30 year fixed mortgage rate? Buying a home later in life means that many people want to have the mortgage paid off early. Although before signing any documents, there are many things to consider. Ensuring the repayment remains the same throughout the mortgage term is very important.
Steer clear of lenders that are offering unbelievable deals because they probably are. Loans agreed with a 15 year fixed mortgage keep the same interest rate throughout the entire life of the agreement. There are no hidden costs involved with this type of plan which is great for many people that want a regular monthly payment. My wife and I looked into the loans available with 15 year fixed mortgage rates when we were searching for a home for sale.
The plan was to pay off the house as soon as possible but we didn’t want to be burdened with high monthly payments. This meant we had to consider 30 year fixed rate mortgage plans as well as those of 15 years. The 15 year fixed mortgage rate was the plan we really wanted because neither of us wanted to be still paying a mortgage when we close to retiring. Too much pressure was placed on the early repayment of the mortgage loan.
We thought about it long and hard and despite the pressure we decided to go with the 30 year loan plan. There were many things that lead us into making this choice. Finding out my wife was having a baby made making the choice so much easier! As she intended to raise our child at home we couldn’t rely on her financial income to the monthly expenditure. The downside to the 15 year fixed mortgage rate was the higher monthly repayment. For us it just wasn’t feasible as we would just be in over our heads. A thirty year loan brought the monthly payments down to a reasonable level.
Making a few additional lump sum payments during the year helps bring down the amount owed. If you make a handful of extra payments throughout a twelve month period you can knock years off of your loan. In the long term, this is a strategy well worth pursuing if you are able. Our first choice would have been to go for the short term 15 year fixed rate mortgage solution but this did not help with our more immediate situation. All things considered, it all worked out for the best in the end.
