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There are a number of type of mortgages offered by lenders in the market. The most general of these types is fixed rate mortgages. Fixed rate mortgage loans are characterized by fixed rates and monthly payments that are usually for a 15-year and 30-year periods.

Fixed rate mortgages are popular in the buyer market because of its stability. Most of consumers are hesitant to get house loans where the rates fluctuate with the changing interest rates of the market. Fixed rate mortgages are generally incredibly affordable, especially when rates are low.

Consumers of fixed rate mortgages are faced with having to pick between a 15-year fixed rate mortgage or a 30-year fixed rate mortgage. Some prefer 15-year fixed rate mortgages because of the shorter duration. Other consumers choose 30-year fixed rate mortgages for the reason that the payments are significantly lower than the former.

Every category of fixed rate mortgages surely has its own benefits and disadvantages. Here are some of them.

30-year Fixed Rate Mortgage – Pros and Cons

A 30-year fixed rate mortgage gives clients the opportunity to borrow money on a long-term basis. They do this without having to worry about the change that might arise in fixed rate mortgage interest rates or payments of such.

Because the interest of a 30-year fixed rate mortgage is amortized over a longer time, the monthly payments for this are lower than those on 15-year loans. Lower monthly payments on 30-year fixed rate mortgages give consumers an additional resource which they can pour into other worthy investments.

On the other hand, this could as well cause a small difficulty for 30-year fixed rate mortgage borrowers. The overall interest bill of a 30-year fixed rate mortgage is much higher owing to the long amortization period. And for the reason that payments for 30-day fixed rate mortgages are usually used to pay up the interest rather than the principal at first, borrowers will be building up their equity at a slower pace.

The high interest rates of 30-day fixed rate mortgage loans do not necessarily stop consumers from taking this category of loan. They reason that higher interest bill for 30-day fixed rate mortgages increases the sum they can deduct at tax time. This could potentially decrease or perhaps, even eliminate their federal income tax liability.

15-year Fixed Rate Mortgage – Advantages and Disadvantages

One of the benefits that attract borrowers into taking a 15-year fixed rate mortgage is the fact that amortization periods for this type of loan are usually shorter. This allows 15-year fixed rate mortgage borrowers to build equity much quicker. And with a 15-year fixed rate mortgage, the overall interest bills are low – as a minimum, considerably lower than those of longer-term loans. Interest rates of a 15-year fixed rate mortgage are also lower than 30-year loans.

The disadvantages however incorporate significantly higher monthly payments, especially when compared with 30-year fixed rate mortgages. This setback of having a 15-year fixed rate mortgage may restrict home buyers to smaller houses than they might be able to afford with longer-term loans.

There are also other factors to take into account when choosing which category of fixed rate mortgage you want to take. Keep in mind that you can actually do a prepayment for your fixed rate mortgage, that way, the principal amount may be notably reduced each month. Thus, fixed rate mortgages may even be paid off sooner than the projected term.

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