Fixed Rate Mortgages

30-Year Fixed-Rate Mortgage

The most popular type of mortgage, the 30-year fixed-rate loan is most appealing to borrowers who want to stay in their homes for a long period of time and who want to enjoy consistent interest payments during this period. Other benefits include keeping housing expenses to a minimum while maximizing mortgage interest deductions for income tax purposes.

Key Features
	This mortgage can require a low down payment, sometimes only 3 or 5 percent.
	Payments are stable -- your monthly mortgage payment will not increase.
	The 30-year fixed-rate mortgage provides maximum interest deduction for tax savings.

 

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20-Year Fixed-Rate Mortgage

With a 20-year fixed-rate mortgage, you can build up equity in your home more quickly than with a traditional 30-year mortgage and save interest over the life of your loan. As with all fixed-rate mortgages, the interest on your loan never changes, bringing you peace of mind that your principal and interest payments will remain level over time. However, higher monthly mortgage payments may make the 20-year fixed-rate mortgage more difficult to qualify for compared to the 30-year fixed-rate mortgage.

Key Features
	You pay less interest over the life of your loan, compared to a 30-year fixed-rate mortgage. For example, on a $100,000 loan at 8.25 percent interest, the 20-year fixed-rate mortgage can save you over $65,000 in interest payments when compared to a 30-year mortgage.
	Interest rate payments in the early years of the mortgage are comparable to a 30-year fixed-rate mortgage, allowing for a sizable mortgage interest tax deduction.
	Your monthly payments are less than for a 15-year mortgage, allowing you a greater chance to qualify for this type of mortgage.

 

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15-Year Fixed-Rate Mortgage

You pay off a 15-year fixed-rate mortgage in half the time it would take you to pay off the traditional 30-year fixed-rate mortgage. This shorter term makes it possible for you to build up equity in your home faster, which can let you move up more quickly to a more expensive home or save more in preparation for retirement or a child's education. This loan is particularly attractive if you're refinancing your mortgage because you can shorten your loan term plus enjoy a lower interest rate. Fifteen-year mortgages are usually offered at interest rates lower than those available with 30-year mortgages. However, higher monthly payments may make it more difficult to qualify for the 15-year fixed-rate mortgage compared to the 30-year fixed-rate mortgage.

Key Features
	A 15-year mortgage offers a lower interest rate than a 30- or 20-year mortgage. This saves you a significant amount of interest over the life of the loan. For example, with a $100,000 loan at 8.25 percent interest, the 15-year mortgage will save you $95,000 in interest payments over the life of your loan, compared to the same mortgage amount for a 30-year term. However, monthly mortgage payments will be higher.
	The shorter-term allows you to own your home outright sooner.