The interest rate remains the same for the life of the loan—whether that’s 15 or 30 years. Your monthly payment remains the same too.Fixed-rate loans let you borrow money for the long term, and lower monthly payments free up money to use for other investments. Fixed-rate mortgages are especially good for people who plan to stay in their home for several years.
30-year Fixed Rate
This type of mortgage provides a lower monthly payment for the same amount than a mortgage with fewer years. You receive a fixed interest rate that makes it easier to set a budget.
- Payments are predictable and more affordable.
- You can pay off your loan sooner by making additional payments toward principal.
- There is no penalty for paying off this loan earlier.
- While the interest rate for a 30-year loan is fixed, you will pay more in interest over the life of the loan than with a shorter-term loan.
- Think about how long you plan to stay in your home; this loan is best for those who intend to stay at least seven years.
15-year Fixed Rate
A shorter loan term and lower interest rates allow you to build equity more quickly. You can pay off your home faster, and you’ll pay less interest than a 30-year loan. However, your monthly payments will be higher than a 30-year fixed rate mortgage.