The latest forecast of the 30-year fixed mortgage
rates has been very positive and consumers are happy of the news.
The interest rate remained at 5% which was announced last April 17,
2009. It has decreased 3 points from its previous rate of 5.03%. The
decrease on the interest has been consistent for the past three
months.
But what exactly is a 30-year fixed mortgage and who
should avail of such type of mortgage? Basically, a 30-year fixed
mortgage is a type of loan with an interest rate that remains the
same for the whole term of the loan. This means to say that if the
interest rate is 5%, this remains until the loan is fully paid. A
30-year fixed mortgage is intended for people who want to have a
fixed deduction according to their financial capability. This is
also a good option for people who intend to stay in their homes for
five years or more.
Since the total amount of loan is spread out for a
30-year period, the monthly payment is more affordable compared to
other mortgages.
A 30-year fixed mortgage rate maybe very sweet and
attractive for most consumers but it would be nice at least know
what the advantages and disadvantages of such scheme so you can
really determine if it is the right mortgage for you.
There are many advantages of a 30-year fixed mortgage
that makes it favored by most homebuyers. The monthly payment is
predictable and there is no need to worry on any inflation rates. It
is also simpler to maintain and you can also avail of tax deductions
from the interests you have paid for your mortgages. You can also
take advantage of the option of applying for refinancing should
there be a continuous drop on the rates.
One of the most significant disadvantages is that the
rates and monthly payments are higher compared to adjustable rate
mortgages and 15-year fixed mortgages. Another disadvantage is that
when the homeowner choose to sell the house in less than 5 years,
they can end up putting large amount of money just to pay for higher
interest compared to adjustable rate mortgages or ARM.
With the recent decreases on the rates of mortgages,
there are many people who are becoming more interested on the
advantages of 30-year mortgage rates in purchasing their new homes.
Whether you are a first time homebuyer or would like to avail of
refinancing, there are more advantages rather than disadvantages of
a 30-year mortgage rate.
But before considering in availing of the benefits of
a 30-year mortgage rate, you must consider your monthly income and
also your monthly expenditures such as other debt payment, personal
expense, tuition fees, travel vacation, household expense and many
more that you might have to pay. You must determine first how much
would be allocated for your mortgage payment so you can compute
according to what is more affordable for you and does not affect
your other financial obligations.
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