Many people automatically Fixed Rate Mortgage that they want a 30-year set attention amount mortgage financial loan. They feel that this offers the maximum peace of mind for homeowner loans in that they forever know exactly what their transaction will be, and their home is completely paid off at the end of the financial loan (anyone up for a "mortgage burning" party?). This is true, but it is actually very expensive for you to go with the 30-year set attention amount option. Other programs offer a shorter length of time at a set attention amount that can save you many dollars of charges for only a slightly higher mortgage financial loan transaction per month. A shorter length financial loan (still at a set rate) usually can be obtained at a slightly lower attention amount, and you build up equity in the home much faster because of the higher transaction per month. Other common fixed-rate terms are 20 decades and 15 decades.
The differences in the attention rate that you will pay over the life of the various fixed-rate financial loan options can be staggering. Let's look at a $200,000 fixed-rate mortgage financial loan at different life terms:
Monthly Total Interest
Term Rate Payment Paid over Life
30 decades 6.00% $1,199.10 $231,676.00
20 decades 5 3/4% $1,404.17 $137,000.08
15 decades 5 1/2% $1,634.17 $ 94,150.60
The difference in total attention costs between 20 decades and 30 decades is dramatic! For an additional transaction per month of $205, you get a little Fixed Rate Mortgage lower attention amount and, more important, you save $94,675.92 in total charges - almost half of what you paid for the home to begin with! If you can afford to pay $1,200 per month, you should be able to afford $1,400 each month - otherwise you are probably buying more home than you can afford.
The buyer of your mortgage financial loan note will always price the financial loan for their purposes. A set attention amount may not be the best deal for you. Are you positive that you will be living in this home for the length of the mortgage financial loan life? On average, a mortgage financial loan lasts only about 7 decades because the borrower moves to a different home or refinances at a low cost. Think hard and long before you lock into a set attention amount mortgage financial loan. Check out other types of financial loan options first. Depending on current attention amount structures, a set attention amount may be preferable to a variable amount - and vice-versa.
The differences in the attention rate that you will pay over the life of the various fixed-rate financial loan options can be staggering. Let's look at a $200,000 fixed-rate mortgage financial loan at different life terms:
Monthly Total Interest
Term Rate Payment Paid over Life
30 decades 6.00% $1,199.10 $231,676.00
20 decades 5 3/4% $1,404.17 $137,000.08
15 decades 5 1/2% $1,634.17 $ 94,150.60
The difference in total attention costs between 20 decades and 30 decades is dramatic! For an additional transaction per month of $205, you get a little Fixed Rate Mortgage lower attention amount and, more important, you save $94,675.92 in total charges - almost half of what you paid for the home to begin with! If you can afford to pay $1,200 per month, you should be able to afford $1,400 each month - otherwise you are probably buying more home than you can afford.
The buyer of your mortgage financial loan note will always price the financial loan for their purposes. A set attention amount may not be the best deal for you. Are you positive that you will be living in this home for the length of the mortgage financial loan life? On average, a mortgage financial loan lasts only about 7 decades because the borrower moves to a different home or refinances at a low cost. Think hard and long before you lock into a set attention amount mortgage financial loan. Check out other types of financial loan options first. Depending on current attention amount structures, a set attention amount may be preferable to a variable amount - and vice-versa.
