If you are looking for a way to finance your new home purchase, a 30 year fixed rate mortgage might be the right choice for you. This is one of the most popular types of home loans because it offers a fixed interest rate in addition to lower monthly payments when compared to other options.
What is a 30 year fixed rate mortgage?
With any fixed rate mortgage, the interest rate will remain the same throughout the life of the loan. This means a homeowner's payments will be predictable and there will never be any surprises. No matter how interest rates change in the market, the loan's rate will be unchanged. For this particular type of fixed rate loan, the borrower has 30 years to pay it back.
Why consider a 30 year fixed rate mortgage?
There are numerous benefits of applying for this type of mortgage. In order to ensure it's the best choice for your situation, consider these four points:
- Predictable payments: The 30 year fixed rate mortgage is popular with homeowners because of its predictability. Regardless of any changes in the market, your payments will remain the same. This is beneficial because it allows you to plan monthly budgets without surprises. Such consistency can bring peace of mind. On the other hand, if market rates decrease, you will be settled in your current rate and might miss out on savings.
- Long term: Before selecting a 30 year loan, consider how long you plan to stay in your home. The lengthy term of the lending is not compatible with short term plans. Most people who choose this type intend to live in the same house for several years.
- Lower monthly payments: The long loan term means your monthly payments will be lower than other shorter options, such as 15 year fixed rate loans. This can help balance the fact that a 30 year loan's initial rate and payment will likely be greater than those of an adjustable rate mortgage.
- More interest overall: By making payments over an extended period of time, you will be paying more compounded interest overall compared to a 15 year loan.
Who qualifies for this type of mortgage?
A lender will need a few pieces of information to help determine the most suitable monthly payment for your situation. Preparing this plan will primarily require details about your income, employment history and credit score.
- Income: Your monthly payment plan will depend on how much you can afford to pay back every month. Fortunately, the payments for 30 year mortgages are lower than those for 15 year loans.
- Employment history: Having a stable employment history will look good on your mortgage application because it shows you are a low lending risk. Traditionally, it helps to have been at the same position for two years, though this requirement is not absolute.
- Credit score: Your credit score will also assist your lender in understanding your financial history. A higher score will help you get approval more easily and will also usually qualify you for a lower interest rate.
If a Thompson Kane 30 year fixed rate mortgage sounds like a good fit for you, apply for one online today!