Why Are 30 Year Mortgages the Most Common Term Choice for Home Loans?
If you have purchased a home or are looking into buying one you will hear "rate and term" a lot.
Rate is the mortgage rate you are receiving your home loan at.
Term is the length of time your loan's payments are split between.
When it comes to rate and term, the most common choice is a 30 year mortgage.
Although the loan is at a higher rate than any other term, the monthly payments are lower because they are spread throughout a longer period of time.
This is probably the main reason for many homeowners decision to go with a 30 year mortgage.
However, that is not the only reason why 30 year fixed mortgages are so popular.
Qualifying for a First Time Home Buyers Loan Many first time home buyers go with 30 year mortgages because it is easier to qualify for.
Buying Up to a More Expensive Home The 30 year fixed mortgage allows you to purchase a more expensive home with easier qualifications.
They Offer a Better Tax Write Off With a 30 year term the interest will be higher than any other term, this creates a larger tax write off.
Fixed and Adjustable Rate Mortgages 30 year mortgages come with either a fixed rate or adjustable rate.
If mortgage rates are very low, many times homeowners will lock in the low rate with a 30 year fixed mortgage.
Going with a fixed rate offers stability because the rate will not be changed during the payment process.
Adjustable rate mortgages usually start at a low rate, but can adjust over time to a very high rate.
This makes an ARM unpredictable and undesired.
Downside of 30 Year Mortgages It may be the most popular home loan for any borrower but there are downsides to the 30 year term.
As said before the rate is higher than any other term.
This means the borrower is paying more towards interest every month than if they chose a 25, 20, 15 or even 10 year mortgage.
Other than that there really are no other downsides to a 30 year mortgage.
The better choice would be a shorter term however you will be paying more in taxes every year anyway.
Many borrowers, from first time home buyers to homeowners looking for a refinance, choose to go with a 30 year mortgage because of its dependability.
This rate and term is stable for a very long time and often offers pre pay options.
This is another reason why it is the most common choice for home loan terms.
Not only is it easy to get and easy to maintain, the options for paying off these loans are much better than others.
That means from the beginning of a homeowners mortgage to the end, they will have a loan that allows them to relax.
Rate is the mortgage rate you are receiving your home loan at.
Term is the length of time your loan's payments are split between.
When it comes to rate and term, the most common choice is a 30 year mortgage.
Although the loan is at a higher rate than any other term, the monthly payments are lower because they are spread throughout a longer period of time.
This is probably the main reason for many homeowners decision to go with a 30 year mortgage.
However, that is not the only reason why 30 year fixed mortgages are so popular.
Qualifying for a First Time Home Buyers Loan Many first time home buyers go with 30 year mortgages because it is easier to qualify for.
Buying Up to a More Expensive Home The 30 year fixed mortgage allows you to purchase a more expensive home with easier qualifications.
They Offer a Better Tax Write Off With a 30 year term the interest will be higher than any other term, this creates a larger tax write off.
Fixed and Adjustable Rate Mortgages 30 year mortgages come with either a fixed rate or adjustable rate.
If mortgage rates are very low, many times homeowners will lock in the low rate with a 30 year fixed mortgage.
Going with a fixed rate offers stability because the rate will not be changed during the payment process.
Adjustable rate mortgages usually start at a low rate, but can adjust over time to a very high rate.
This makes an ARM unpredictable and undesired.
Downside of 30 Year Mortgages It may be the most popular home loan for any borrower but there are downsides to the 30 year term.
As said before the rate is higher than any other term.
This means the borrower is paying more towards interest every month than if they chose a 25, 20, 15 or even 10 year mortgage.
Other than that there really are no other downsides to a 30 year mortgage.
The better choice would be a shorter term however you will be paying more in taxes every year anyway.
Many borrowers, from first time home buyers to homeowners looking for a refinance, choose to go with a 30 year mortgage because of its dependability.
This rate and term is stable for a very long time and often offers pre pay options.
This is another reason why it is the most common choice for home loan terms.
Not only is it easy to get and easy to maintain, the options for paying off these loans are much better than others.
That means from the beginning of a homeowners mortgage to the end, they will have a loan that allows them to relax.
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