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30-Year Fixed Home Loans with Newfi
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What is a 30-Year Fixed Rate Mortgage?
30-Year Fixed Rate Mortgages are a fixed interest rate, fixed monthly payment mortgage option. This means that your interest rate does not change for the life of the loan, which can be a benefit to borrowers who are looking for a lower monthly payment and an unmoving interest rate. Conventional 30-Year Fixed Rate Home Loans are backed by Fannie Mae and Freddie Mac. They have specific lending guidelines for income documentation and employment verification. There are also a number of 30-Year Mortgage options available for borrowers who are self-employed and may need to submit alternative income documentation.
How Does the 30-Year Mortgage Work?
- After you pay your down payment and closing costs at closing, your 30-Year Fixed Rate Mortgage will have a fixed monthly payment that never changes for the 30 years.
- You will always be paying toward both your principal and interest balance with a 30-Year Fixed Rate Mortgage. However, because these home loans offer borrowers a longer payback period, a decent portion of your monthly mortgage payment will go toward the interest balance (the amount you owe on your loan in interest) for the first few years of the home loan.
- As you continue to pay down your mortgage, more of your monthly payment will start paying down the principal balance (the total cost of your home before interest). This payment schedule (also referred to as an amortization schedule) will keep you on track to pay off your mortgage in 30 years.
Frequently Asked Questions
- You’ll have a fixed interest rate for the life of the loan, so your mortgage will never be affected by fluctuating rates.
- Because monthly mortgage payments are lower with a 30-Year Fixed Rate Mortgage, you may be able to afford more home or keep more money in your pocket to put toward other financial goals.
- This mortgage option offers stable and consistent monthly payments, which means that borrowers often have an easier time budgeting.
- You may be able to put down a smaller down payment, even as little as 3%!
- If you opt for putting down a lower down payment (less than 20% of the home price), you’ll likely be required to have mortgage insurance.
- You will likely pay more in interest over the life of the loan compared to a 15-Year Fixed Rate Mortgage.
- It takes more time to build equity in your home, since most of your early payments go toward the interest balance.
- If you move before you’ve built up equity in your home, the cost of borrowing may outweigh what you’ve put back into your home.
When you take out a loan (whether it be a personal, student, or mortgage loan) there will likely be an interest rate associated with your loan balance. An interest rate is essentially a fee that lenders charge their borrowers for lending money to them.
With a 30-Year Fixed Rate Mortgage, you pay your interest balance and principal balance in one neat monthly payment. However, the interest balance is technically separate from the principal balance, and based on a number of factors including a percentage of your mortgage loan.
A 15-Year Fixed Rate Mortgage offers borrowers the ability to pay down their mortgage quickly while building equity in their home faster. Opting for a shorter loan term also means that you will pay less interest over the life of the loan both because of the shorter loan term, and because 15-Year Mortgages often have lower interest rates.
However, it’s important to remember that a shorter loan term means that your monthly payments will be higher comparatively and you’ll likely be able to afford less house. You can learn more about 15-Year Fixed Rate Mortgages here!
A 30-Year Fixed Rate Mortgages offers lower monthly payments, allowing you to afford more house for a given payment. The lower monthly payments also mean more cash for you to spend or invest on a monthly basis. However, you will pay more in interest over the life of the loan and build equity more slowly.
An Adjustable Rate Mortgage (ARM) is a mortgage option that offers borrowers an interest rate that changes (or adjusts) based on market interest rate fluctuation. Borrowers who are looking to lock lower interest rates may opt for an ARM.
Opting for a mortgage option with fluctuating rates ultimately means a fluctuating monthly payment. This can be a great thing when interest rates are low and you’re able to pay less, but you also run the risk of having to pay more during times where rates peak. This can make it hard to budget consistently or put your money toward other things like investments and vacations.
It’s important to talk to a professional about your options. Get in touch with one of our Senior Loan Advisors today!
Yes! Borrowers can refinance their 30-Year Fixed Rate Mortgage to get a new interest rate, loan term, or mortgage loan. You may also consider refinancing to get cash out after you’ve built up some equity in your home. Refinancing can be a great way to build equity in your home faster!
Because everyone has their own unique situation, we recommend speaking to a loan advisor about your options as your first step. Go to newfi.com/get-started or fill out the form on this page for a free consultation with one of our licensed loan advisors to learn about what documentation and qualifications you may need!