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There are a number of mortgage types being offered by lenders in the lending market these days. One of the most popular and in demand is the fixed interest rate mortgage. Fixed mortgage loans possess fixed rates and involved monthly payments generally are of 15 and 30 year periods. Fixed interest rate mortgages are popular within the customer market because of it stability. Actually, clients are quite wary in applying for home loans if only because of rate fluctuation in the market. But really, fixed rate mortgage loans are affordable to everyone, especially if present rates are low. If you are a borrower of fixed rate loan, you will face the take of opting between 15 year fixed rate or 30 year fixed loan. Actually some borrowers prefer the 15 year type if only because it is a shorter term. However, many others choose the 30 year type because of the lower monthly payment that it offers. What are the advantages and disadvantages of a 30-year fixed interest mortgage? One advantage that this type of loan offers is the fact that it provides borrowers the opportunity to obtain loan under a long term payment scheme. They are able to enjoy such privilege without ever worrying on any changes on rates and their corresponding payments. Because of the thirty year loan’s longer amortization period, it is automatic that the payments every month is low, as compared to the payments of the 15 year mortgage loan. However, this works as a disadvantage as the overall interest bills is higher precisely because of the longer period of amortization. Also, since the monthly payments for 30 year fixed rate loans are used as payment for interest instead of principal, the borrower’s equity is built at slower pace. Even then, high interests do not deter borrowers from obtaining this type of loan, the reasons of which are the increase on the deductible amount during tax period and ultimately the reduction or even elimination of liability on government income tax. Likewise, 15 year Fixed Rate Mortgages has its share of advantages and disadvantages. One advantage attracting borrowers into getting this type of loan is the fact that amortization periods are much shorter, which results in the fast building of equity. Also, the interest bills overall are low as the rates of fifteen year loans are lower than that of thirty year loan. On the other hand, the disadvantages include high payments to meet every month. Such setback of having a fifteen year fixed loan actually limits borrowers into small home properties. For more interesting and engaging articles and discussion on mortgage loan lead and mortgage in general, do visit our Refinance Home Mortgage for You blog.
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