How to Get the Ideal Out of Your Fixed Rate Mortgage

by Lam JW Ray

The monthly payments for 30 year or 15 year fixed mortgages are the main considerations for many people who are looking to buy a home. No-one wants a mortgage hanging around their neck forever but with home buyers entering the market later, an early repayment of this loan is important. In a situation as important as this time needs to be spent considering all the available options. One point to remember is ensuring that your monthly mortgage repayment remains the same throughout the entire period of the loan.

Avoid the mortgage loans offered by some lenders, those that sound unbelievable because they usually are. The interest rate should remain the same for fixed rate mortgages until the loan is repaid. This is always a good thing for those people that don’t like surprises. Both my wife and I decided to research fixed rate mortgages when we started looking at homes for sale.

Although paying off the mortgage was our main priority, we did not want to have monthly payments that were uncomfortably high. When we considered fixed rate mortgages we also looked into even longer term loans that spanned 30 years as well. Because we didn’t still want to have a mortgage close to retirement, we hoped we would be able to afford a shorter 15 year fixed rate mortgage. There was a lot of pressure to have the house paid off as soon as possible.

Eventually we decided on a 30 year loan after looking at all the other possibilities. There were many things that lead us into making this choice. The main reason was that I found out my wife was pregnant. Because she wanted to be at home for our child, her income wouldn’t only be uncertain but also irregular. The downside to the 15 year fixed mortgage rate was the higher monthly repayment. All things considered, we just didn’t want to bite off more than we could chew. We found that the monthly repayments on a 30 year loan were more manageable.

We found that if we could make a few extra payments throughout each year then it would gradually reduce the principle sum owed. Those few extra payments also help reduce the number of years you have to pay the loan over. This may be difficult but well worth the effort in the a few years down the line. Our desire for a 15 year fixed rate mortgage was second place to our more immediate needs. Things worked out well anyway, even though we were unsure about it to begin with.

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