What to Look Out For in a Fixed Rate Mortgage
Lam JW Ray
The monthly payments for 30 year or 15 year fixed mortgages are the main considerations for many people who are looking to buy a home. No-one wants a mortgage hanging around their neck forever but with home buyers entering the market later, an early repayment of this loan is important. In a situation as important as this time needs to be spent considering all the available options. One point to remember is ensuring that your monthly mortgage repayment remains the same throughout the entire period of the loan.
It seems that some lenders are happy to offer deals that appear too good to be true and they usually are. The interest rate should remain the same for fixed rate mortgages until the loan is repaid. This is always a good thing for those people that don't like surprises. My wife and I looked into the loans available with 15 year fixed mortgage rates when we were searching for a home for sale.
Although paying off the mortgage was our main priority, we did not want to have monthly payments that were uncomfortably high. When we considered fixed rate mortgages we also looked into even longer term loans that spanned 30 years as well. Because we didn't still want to have a mortgage close to retirement, we hoped we would be able to afford a shorter 15 year fixed rate mortgage. There was a lot of pressure to have the house paid off as soon as possible.
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.
About the Author:
|
