When considering which mortgage option will work best to get you into your new home, there are several factors that must be weighed. Between calculating monthly payments, interest rates and available savings, it is easy for the process to become confusing and overwhelming. If you are in this situation yourself, you may be uncertain about which loan option to choose. And while there are several avenues worth exploring, Atlanta mortgage lenders suggest 30-year fixed rate mortgages because they are the most selected amongst home buyers.
At BrightPath, we will use our unparalleled knowledge and professionalism to find mortgage solutions that support your goals.
What is a 30-Year Fixed Rate Mortgage?
According to Atlanta mortgage lenders, a 30-year fixed rate mortgage is a structured loan option in which you receive a finite interest rate that you must repay over a 30-year time span. Similar to a 15-year fixed rate mortgage, you must put more money into your down payment to receive a larger loan from your lender. Your credit history and existing debt will also be considered by the lender when setting the terms of the loan.
The Advantages of a 30-Year Fixed Rate Mortgage
There are many benefits that come with 30-year fixed rate mortgages that make them the preferred choice amongst most home buyers.
- Predictable interest rate and monthly payments. Since this is a fixed rate mortgage instead of an adjustable rate mortgage, your interest rate and monthly payments will remain the same throughout the entirety of your loan term.
- Reduced monthly payments. Compared to other loan types, the monthly payments required for a 30-year fixed rate loan are lower because the life of the loan is longer. As a result, you will have additional money to put towards savings or other financial goals.
- Easier qualification. Depending on your credit score and earnings, it may be easier to qualify for a 30-year fixed rate mortgage over other loan types because the monthly payments are lower.
- Expands your housing options. Atlanta mortgage lenders understand how difficult it can be to get into your desired home when financial concerns stand in the way. Based on your income, a 30-year fixed rate mortgage could make it easier for you to afford a more expensive property.
- Increased flexibility. While your lender will provide you with a set amortization schedule, a 30-year fixed rate mortgage allows you the option to put additional money towards your monthly payments so that you can reduce your debt faster.
The Disadvantages of a 30-Year Fixed Rate Mortgage
While Atlanta mortgage lenders recommend 30-year fixed rate mortgages for most home buyers, there are some drawbacks to consider before making your decision.
- Higher interest rates. Since the loan term of a 30-year fixed rate mortgage is longer, there is more risk for the lender. As a result, they will negotiate a higher interest rate for their protection.
- Costlier over time. With a longer loan term, you will end up paying more money over time towards your interest as compared to shorter-term mortgages.
- Slower buildup of home equity. To build the equity of your home, you must pay down the principal payment. The lower monthly payments that come with 30-year fixed rate mortgages make it more difficult to put money towards the principal, so it will take longer to build equity in your home.
- Potential to overborrow. While 30-year fixed rate mortgages can help you get into a more expensive home, you run the risk of purchasing a property that is more difficult to afford over time. Consider additional expenses like property taxes and maintenance costs when choosing your house and loan term.
Atlanta Mortgage Lenders Can Help You Apply for a Mortgage Today
While there are both opportunities and obstacles associated with 30-year fixed rate mortgages, Atlanta mortgage lenders know they are the surest way to get you into the home you have always wanted.
Contact BrightPath today to schedule a consultation and determine if a 30-year fixed rate mortgage is the right option for you.
At BrightPath, we work hard to provide you with the best and brightest mortgage solutions.