What are fixed rate home loans?
A fixed-rate mortgage loan is a type of home loan in which the monthly principal and interest payments remain the same throughout the life of the loan. The most common fixed-rate mortgage loan terms are 30 and 15 years. With a 30-year fixed-rate mortgage, your monthly payments are lower than they would be on a 15-year fixed-rate loan, but the 15-year home loan allows you to repay your loan faster and with less interest cost.
But like any other loan option, there’s much to consider before diving into a fixed rate home loan arrangement. Balancing the amount of stability and flexibility you need in a fixed mortgage can be tough without the proper guidance. Accunet Mortgage has plenty of experience helping first-time home buyers, long-term owners and others choose the fixed rate mortgage option that works best for them.
Let’s take a closer look at some of the different advantages of fixed-rate mortgages have and see how they compare with one another.
30-year fixed mortgage
By and large, this option is a great choice for homeowners looking for long-term security and protection from unpredictable interest rate fluctuations. In addition, you’ll still have the flexibility to refinance when the interest rate market is swinging in your favor. Some of the key advantages of a 30-year fixed mortgage include:
- Steady payment each month – Your monthly mortgage payment is unwavering, which means you can plan out your financial future with confidence.
- Flexible refinance options – When rates are low, a 30-year fixed mortgage gives you the freedom to refinance and lower your payment. There is no prepayment penalty. And when interest rates rise, you’re locked into the lower rate and are protected.
- Long-term advantages – By knowing precisely how much you can afford each month, the 30-year fixed mortgage will allow you to maximize the amount of home you can purchase.
For many of the reasons above, a 30-year fixed-rate home loan is a popular choice for those looking to invest for the future. But if you want similar security, and an option that could help you save money in total interest costs depending on your personal financial situation, then a 15-year fixed-rate mortgage might be the best option for you.
15-year fixed mortgage
Compared to a 30-year fixed mortgage, a 15-year loan term has the benefit of lower interest rates and lower overall interest cost over the whole term. The catch, however, is the higher monthly payment that goes along with it. This is still the recommended fixed rate home loan for buyers who want to build equity faster. Some of the important benefits of a 15-year fixed mortgage include the following:
- Build up equity quicker – The larger monthly payment gives you more opportunity to build up equity and pay off your mortgage sooner.
- Lower interest rates – A 15-year fixed-rate mortgage has lower interest rates than its 30-year counterpart, which means you can potentially save thousands.
- A great choice for building wealth – This shorter loan term greatly benefits those who want to build wealth and eliminate debt. The shorter loan term can be used to build wealth and help plan for retirement.
If the higher monthly payment is within your reach financially, then the 15-year fixed mortgage loan can be an excellent choice. But both loan options are incredibly complex and require a great deal of thought and professional guidance.
Our monthly mortgage payment calculator can help you in determining, “should I get a 15-year mortgage, or should I get a 30-year mortgage?”.
Custom fixed mortgage
For even more flexibility, Accunet Mortgage also gives customers the option of picking a custom fixed mortgage term that works best for their unique situation. This means you can choose any loan term between 10 and 30 years with a fixed mortgage rate. What’s the advantage? Besides being incredibly flexible, the custom fixed mortgage option can actually help you pay off your mortgage faster by letting you shorten your loan term for a reduced interest rate. Plus, this option is tailor-made to fit your specific financial needs, accounting for all major life milestones that might affect your budget along the way.
Before deciding which fixed-rate mortgage option is right for you, you’ll need to first get a grasp of your long-term and short-term goals. Do you plan on upgrading to a larger home in the near future? Have you recently started a family and want to limit the number of moves so you can stay in one place longer? Accunet Mortgage can help you get to the bottom of these questions and more so you can feel completely satisfied with your fixed-rate home loan decision.
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