15 Year Fixed Rate Home Loan

Posted in General, December 21st, 2006 |

Buying a house is an important deal in itself. There are so many things one needs to consider while buying a new house. One of the important things you need to consider is whether you need a 15-year fixed rate home loan or a 30-year fixed rate home loan for your monthly payments.

No one likes to be in debts for a long period of time. If you too would like to pay the monthly payments of your home as soon as possible then its better to opt for a 15-year fixed rate home loan. However it is better not to rush into a final decision, as there are many things to be considered while selecting the mortgage rates for your house.

Benefits of a 15-Year fixed rate home loan

A 15-year fixed rate home loan is a perfect option if you would like pay-down benefits of a shorter-term product.
If you are approaching your retirement it’s better to switch to a 15-year fixed rate home loan rather than opting a 30-year fixed rate home loan.
The monthly payment of a 15-year fixed rate home loan is comparatively more than a 30-year home loan or a 40-year home loan. However you will have to pay a relatively lower interest rate for a 15-year home loan as compared to 30-year or 40-year home loan.

15-year fixed rate home loan v/s 15-year adjustable rate home loan

There is a high level of risk involved as far as selecting an adjustable rate home loan is concerned. Interest rate is never static it keeps on fluctuating every now and then. If you would like to apply for a 15-year home loan it is better you opt for a fixed rate loan rather than an adjustable rate loan. Selecting a 15-year home loan means that you are paying more monthly payments as compared to a 30-year loan or a 40- year loan. It would make no sense to opt for a 15-year adjustable rate mortgage if you are not confident about paying your monthly payments.

Selecting an adjustable rate mortgage will mean that you will have to pay a higher interest rate incase of an increase in interest rate for a particular month. If you cannot sustain the ever increasing interest rate on your home loan, then a 15-year fixed rate home loan may be perfect for you.