4 Things You Didn’t Know About 30 Year Fixed Rate Mortgages

Thirty-year fixed rate mortgages are the most popular type of mortgage in the United States, and it’s easy to see why. With an interest rate set at a fixed rate, you don’t have to worry about sudden changes in your monthly payments or the risk that rates will rise so high that you can no longer afford to pay your mortgage. But even though 30 year fixed rate mortgages are relatively common, there are still some facts about them that might surprise you. Here are four things about 30 year fixed rate mortgages that you probably didn’t know!

1) What is a 30 year fixed rate loan?

A 30 year fixed rate loan is a mortgage that has a set interest rate for 30 years. This term is typically chosen by homeowners who plan to stay in their home for several years. For those who are planning on selling within that time frame, it may not be the best choice as it could mean paying more than you’d like in interest payments.

2) How much money do you need to make this work?

For most of us, purchasing a home is one of our biggest financial achievements. But what if you don’t have 20% to put down as a down payment? Depending on how much you need to borrow and your credit score, a lender might approve you for a conventional loan, FHA loan, or a Veterans loan ( VA loan ). When you take out a 30-year fixed rate mortgage (FRM), your interest rate will stay locked in over that period of time.

3) Are there any risks involved with these loans?

A fixed-rate mortgage offers advantages if you plan to keep your home for a long time. If you might sell in 5 years or less, however, a 5/1 adjustable-rate mortgage could make more sense. Below is an overview of how they compare

4) Is this product right for your situation?

Not all mortgage products are created equal. If you’re a first-time homebuyer, or you expect to stay in your new home for less than seven years, then a 15-year fixed rate loan could be a better fit for you. Your ability to pay back your loan is also an important factor: if your salary has declined over time, or if you had major life events that temporarily affected your income—such as losing a job or having children—you may need to consider a 30-year fixed mortgage.