In a real estate market full of ups and downs, there is plenty of comfort to be found in stability. Get that stability for decades to come by choosing a 30-year fixed-rate mortgage loan.
Why Choose a 30-Year, Fixed-Rate Mortgage Loan?
Unlike an adjustable-rate mortgage, where a mortgage’s annual percentage rate changes with the real estate market, a fixed-rate loan’s interest rate remains stable for the entire home loan term (excluding refinancing). In other words, rates will not go up the entire life of the loan, unless you refinance.
An example of this type of mortgage loan is a 30-year, fixed-rate FHA loan for first-time homebuyers, which often comes with a lower rate, down payment, and credit score requirements than other loan types.
Benefits of 30-Year, Fixed-Rate Loans
People of all walks of life regularly choose this type of mortgage, and for good reason: it offers incredible advantages over other loan types, including the following.
1. Locking in a lower interest rate when the market is in the homebuyer’s favor.
The home market shifts constantly. Sometimes it is in the seller’s favor. Sometimes it’s in the homebuyer’s. This latter time is the best time to choose a fixed-rate loan—so you can grab a lower rate and lock it in for decades to come.
2. Being able to budget well in advance.
A single, unchanging interest rate means you can budget far into the future. Even when the market changes and everything seems up in the air, your largest monthly expense will still be consistent, making personal finance management that much easier in what can otherwise be stressful times.
3. Having lower monthly mortgage payments.
A 30-year loan often has lower monthly mortgage payments than shorter-term loans. Here are two reasons why that works for you.
- When you are experiencing easy financial times, you can pay not just toward your minimum monthly payment, but also a little extra towards your principal loan amount (not interest). This strategy helps you pay off your loans sooner (and have fewer interest payments in the long run).
- When times are tough, you have locked yourself into a lower monthly payment than you would otherwise have, had you chosen a shorter-term loan. This strategy means you have some breathing room when your budgets tighten with uncertain markets and inflation.
Rates for longer-term loans are typically lower than shorter-term ones. That said, the average rate varies based on several factors. Specifically, mortgage lenders set the rates based on factors like the following:
- The borrower’s credit score,
- Down payment amount and loan-to-value ratio,
- Total loan amount and closing costs,
- Current mortgage rate trends,
- Discount points,
- Market refinance rates (if refinancing),
- Whether or not the property is a single-family primary residence,
- Fluctuating home prices, and
- Property taxes in the surrounding area.
In addition to these variables, some lenders may also tack on other fees to the mortgage, such as a loan origination fee, which may increase your upfront costs when purchasing a new home.
Curious what your mortgage rate could be? Contact us, and we can walk through your options with you (and help you lock in the best rate). Or, simply use our calculator below!
Mortgage Interest Rate
Quickly determine what your mortgage interest rate could be (and lock in those low rates) with our FREE mortgage calculator.
Want to learn more? Contact us today to discuss your loan options.
30-year loans are a big investment for both the borrower and the lender. To increase the odds that borrowers will not default on their loans, lenders have certain requirements in place for people wanting a 30-year mortgage.
While those requirements can vary, most lenders will require that you have:
- Proof of ability to make payments,
- Steady employment history,
- Homeowners insurance,
- Mortgage insurance (for less than 20% down payments or for certain loan types, such as FHA loans), and
- A certain credit score (typically at least 620).
Curious if you meet our requirements? Contact us now.
Complete Your Mortgage Application with Delmar Mortgage
We can help you make your dreams of home ownership more than just dreams. At every stage of the home-buying process, we are here to help you achieve your financial goals with our decades of experience. We work with you to create personalized mortgage solutions that work best for your unique situation, so you can be in the best position now… and in the future.
Lean on our expertise, so you can focus on what really matters in life.