Many couples buying a home are face with the question of whether to opt for a 15 or 30 year fixed mortgage rate. Early completion of a mortgage is important for those of us that leave buying a home until later in life. 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 is always wise to avoid agreements that do not appear to have any negative aspects because they invariably have but are hidden. A 15 year fixed rate mortgage means the interest rate remains stable for the life of the loan. If you are someone that wants a loan with a regular fixed repayment and no additional charges then this is the main benefit with this type of agreement. When my wife and I were looking at homes for sale we decided to check out the various loans available with 15 year fixed mortgage rates.
Having a realistic, sustainable monthly payment on our mortgage was important even though we wanted to pay off our debt as soon as possible. This meant we had to consider 30 year fixed rate mortgage plans as well as those of 15 years. Still, having a mortgage close to retirement was not what we were looking for, so we decided to try for a loan with a 15 year fixed mortgage. We were worried about the emphasis placed on early completion of the mortgage.
Eventually we decided on a 30 year loan after looking at all the other possibilities. There were many things that lead us into making this choice.Discovering my wife was having a baby was the most important reason. The contribution my wife made to the monthly finances would be unreliable since she intended to raise our child at home.
The problem we could see was the increased financial commitment on a monthly basis if we had opted for the 15 year fixed mortgage rate. We knew that it just was not an option and the risk was too great. The 30 year loan repayments were considerably lower than the 15 year figures.
Being able to make additional lump sum payments during the year means the outstanding loan reduces faster. Those few extra payments also help reduce the number of years you have to pay the loan over. This is well worth it in the long term but it does require some discipline. It was hard going against our preference for a shorter term, 15 year fixed rate mortgage, but we had to think about more immediate needs and abilities. All things considered, it all worked out for the best in the end.
Author: Gibson MasekoThis author has published 11 articles so far.