Priority Mortgage Offers 15, 20, 30 Year Fixed Rate Loans
Are you wondering if a fixed rate loan is best for you? Fixed rate mortgages provide homeowners an opportunity to secure a consistent rate across the board – from interest rates, monthly payments, to even the principal. It’s important to know that fixed rate loans definitely have their advantage -and it’s important to know when a fixed rate mortgage is optimal.
For example, if you think that interest rates may rise in the coming months or years or you are planning on staying in your home for many years, fixed rate loans are often the best choice. Let’s take a look at your options – and a bit more on the specifics!
30 Year FixedThe most common Conventional fixed rate mortgage term is 30 years or 360 equal monthly payments. A 30 Year Conventional fixed rate mortgage offers the lowest fixed monthly payment available and typically requires a 5% down payment at closing. Conventional mortgages generally offer the best rates in the market and are more difficult to qualify for than FHA or VA loans. Conventional mortgages will require Private Mortgage Insurance (PMI) with less than 20% down, but PMI can be avoided if the borrower can put at least that amount or more down at closing. For those with larger down payments, conventional mortgagesare preferred over FHA mortgages because the added expense of mortgage insurance can be avoided.
Some key points:
- 5% down payment required on purchase
- Minimum credit score - usually 620
- Post- bankruptcy: can qualify after 4 years
- Post-foreclosure: can qualify after 7 years
- Post-shortsale: Can Qualify after 2 years (LTV restrictions may apply)
A borrower may opt for ashorter-term conventional loan in order to pay off the debt faster. Typically, fixed rate mortgages are offered with terms of 20, 15 and even 10 years. The shorter the term the lower rate will be, however the monthly payment will be higher because the debt is amortized over a shorter period. A borrower may choose one of these options when there is high job/income stability and limited consumer debts. For example, well established borrowers purchasing a home in their latter working years may choose a shorter-term mortgage in order to pay off the debt prior to retirement.
For any borrower, the safety net of a 30-year mortgage may be a better choice. The safety net of a lower payment obligation may provide peace of mind. The debt can always be prepaid with the same amortization schedule as a shorter-term mortgage without the obligation of that higher payment should a financial disruption occur.