30-Year Fixed-Rate Mortgages

The 30-year fixed-rate mortgage continues to dominate home mortgages, with around 90 percent of American homeowners opting for this type of loan. Thirty- year fixed mortgages have three advantages:

1. Affordability

Because the term is longer, the payments are lower than 15- year fixed-rate mortgages. This is especially important for first-time buyers. Lower payments are manageable, and look great compared to high rents.

2. Stability

There are no surprises; you know exactly what your principal and interest will be every month. This contrasts with the uncertainty of adjustable-rate mortgages, where the rate varies.

3. Flexibility

Thirty-year fixed-rate mortgages can be paid off early without any penalty. That way, if you choose to refinance or sell your home, there won’t be a prepayment fee.

Would a 30-year fixed-rate mortgage be right for you?

When weighing loan options, do these traits sound like you:

  • Do you plan to stay in your home for many years?
  • Do you want the lowest fixed payment available?
  • Do you prefer a payment that stays the same for reliable budgeting?
  • Does an unchanging rate eliminate financial anxiety?

If you answered “Yes” to those questions, a 30-year fixed-rate mortgage is probably the way to go. Plus, if you have extra cash, you can opt to pay principal without penalty.