30-Year Fixed Rate Mortgages (FRMs)
Although Fixed-Rate Mortgages are available for 40, 30, 25, 20, 15 and 10 years, this documentation will focus on details for a 30-Year Fixed-Rate Mortgage (FRM) – the most common and popular type of Fixed–Rate Mortgage in today’s industry. A 30-Year Fixed-Rate Mortgage is an excellent choice if the consumer is looking for a longer-term, stable loan! Also a superb selection if the consumer plans to stay in their home for a lengthy period (of at least ten years). And, many consumers will find the thirty-year-term just right for their monthly budgetary threshold. Thirty-years is usually long enough for consumers with average incomes to pay back the mortgage in a comfortable fashion that is well within their budget. 30-Year Fixed-Rate Mortgages offer consistent monthly payments for all thirty years. Consumers should strive to get a fixed rate loan locked-in while interest rates are low so they will benefit with a great rate for the entire life of the loan. In basic terminology, “30-Year” refers to the term of the mortgage and therefore, the payments would be spread out over thirty years.
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About 30-Year Fixed Rate Mortgages
Are there any special benefits that only 30-Year Fixed-Rate Mortgages can offer? Absolutely! Numerous 30-Year FRMs require as little as 5% or even 3% down payments. Consumers can also benefit the most out of mortgage interest deductions on their tax returns with this type of loan.
Are there any other type of payment options for a 30-Year FRM? Yes! By utilizing a Biweekly mortgage plan, the consumer pays half of the monthly mortgage payment every two weeks. This allows the consumer to repay a loan much quicker. For a 30-Year FRM, if the consumer uses this plan, their loan could be paid off within 18-19 years!
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What happens if interest rates drop significantly a few years after the loan is secured – would the consumer still have to pay their higher rate for the whole thirty (30) years? The answer is no because the consumer could consider refinancing as a possibility or there even may be other options available when the time comes.
How about the consumer who already secured a 30-Year FRM but is now making less money after a career move–what happens now when the consumer faces new budget constraints? Consider refinancing. But, if the consumer’s financial situation is to the point whereby they are unable to pay any bills, they may wish to consider a debt consolidation.
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