The Top 10 Reasons You Should Always Get A 30 Year Fixed Rate Mortgage
1. For most people owning a home is a life long investment. When asked most homeowners plan on living in their home until they die. This is hardly ever the case because most people will move within 5-10 years if they plan on making this place a primary residence. Families grow and life happens. You may want to put your kids in a better school district or you may have been given a better job.
2. Why take a risk on something that you want to keep in your family for ever. With a 30 year fixed rate mortgage you know what your payment on your house is going to be like until the day it is paid off.
3. Even if you only plan on being in your home for less than 3 years you do not know what is going to happen between now and the next 3 years. Maybe you are offered a promotion to stay with that company, maybe you meet somebody and get married.
4. Interest rates change every single day. So what sounded like a great idea 2 years ago to get a adjustable rate mortgage because you could save .5%-1% on that mortgage might bite you in the butt when it adjusts anywhere from 2%-5%.
5. Sure, you could just refinance the loan before it adjusts but why would you do that. It would just take away all of the savings you had with lower payments from the time you were in the loan. If you were able to save .5% over the past three years and now lets say you refinance to the same interest rate (won’t happen) as you had with your ARM to a 30 Year Fixed Rate Mortgage you still have to pay all of the closing costs again. Sure the lender will just roll the costs into the loan so its not like you paid anything out of pocket on the front side, but you are paying. With closing costs in the $2k-$4k range that monthly interest savings of $50 you had with your ARM just went bye bye.
6. Mortgage brokers and banks knew what they were doing when they started pushing these loans during the housing boom. They knew that everbody before took fixed rate loans and that most people never refinanced out of their loan. They stayed in that loan until the day it was paid off. Now you had first time home buyers and so called real estate investors getting into the mix with all of this cheap money going around because of Alan Greenspan lowering interest rates to historically low numbers. The mortgage companies knew they could market the hell out of adjustable mortgages on television and the internet saying that “we have the lowest rate” or “when banks compete you win.” So now it is embedded in our heads that we NEED the lowest rate and that’s all that is important. So while you were out shopping the lowest 30 year fixed rate mortgage somebody decided to present a 3 Year ARM to you with an interest rate 1% less than everybody else’s. Its sounds so good because it is the lowest rate so you take it. After closing on the loan your mortgage broker or banker says don’t worry about the rate adjusting in a couple years we will give you a call and lock you in before it happens. Of course they will do this because then they can charge you more costs and make more money when they sell your loan.
7. If the rate is all you are concerned about then what you can do to protect yourself from ever having to refinance in the future is to save up the money and pay for the house with cash in full. I know its old school thinking but it works.
8. If the interest rate thing bothers you then you need to find out the break even point on getting the lower interest rate versus taking the higher rate on the 30 year fixed. You will see that a lot of times that the break even time is going to be when it adjusts and then after that the 30 year fixed mortgage’s benefits kick in. What makes more sense, saving money on interest for 3 years or saving costs and interests for 27 years? The math is simple but the American population is so interest rate focused that they never stepped back to think about what might happen when the rate changes.
9. This is a neat trick. How about take the 30 year mortgage and just put more money on top of your monthly payment. This additional money every single month will get the balance going down faster and over the life span of the loan you will effectively pay less interest.
10. The 30 year fixed rate mortgage just makes sense. There is no need to ever refinance. You would only need to refinance if interest rates drop more than 2% from what you are currently fixed in at or for life emergencies. Besides that an adjustable rate mortgage is just a way for the mortgage companies to make more money.
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July 7th, 2008 at 4:47 pm
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July 7th, 2008 at 8:15 pm
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July 8th, 2008 at 12:40 pm
[...] The Top 10 Reasons You Should Always Get A 30 Year Fixed Rate Mortgage [...]
July 8th, 2008 at 12:41 pm
[...] The Top 10 Reasons You Should Always Get A 30 Year Fixed Rate Mortgage [...]
July 9th, 2008 at 10:11 am
[...] The Top 10 Reasons You Should Always Get A 30 Year Fixed Rate Mortgage [...]
July 11th, 2008 at 4:58 pm
[...] it does not correlate into a 1% lower interest rate. If you were offered a 6% interest rate on a 30 year fixed rate mortgage it does not mean you now have a 5% interest rate. You are probably now going to be offered a 5.5% [...]
July 14th, 2008 at 5:38 pm
[...] any given day the stock market will produce interest rates that are at leat .25% less than what a 30 year fixed rate mortgage will. Since the American population is so interest rate focused all that they hear is that they are [...]
July 18th, 2008 at 7:24 am
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July 19th, 2008 at 7:55 pm
[...] there has a price tag for the mortgage company to earn. How it usually works is on a conventional 30 year fixed rate mortgage where the potential home owners are doing a full documentation loan, the mortgage is worth 2%. What [...]
July 22nd, 2008 at 3:45 pm
[...] equity in your home if your trying to refinance to pay off debt and it would approve with the best 30 year fixed mortgage rates for the day. Its like you had good credit scores just because you had some equity in your [...]
July 23rd, 2008 at 5:33 pm
[...] and home owners insurance are $4,000. This would make your monthly esrow payment $333. If you had a 30 year fixed rate mortgage of $125k at 6% your principal and interest payment would be $750 a month. If you escrowed it would [...]
July 24th, 2008 at 11:45 pm
[...] Bond (usually you can take that number and add 2%-3% on top of it to figure out what the going 30 year fixed rate mortgage [...]
July 28th, 2008 at 7:32 pm
[...] you have to for a certain period of time. Typically most interest only home loans are a normal 30 year fixed interest rate mortgage where the first ten years of the loan are an interest only option period and then at year ten it [...]
July 28th, 2008 at 9:37 pm
[...] This covered bond market will force mortgage companies to write better 30 year fixed mortgages because if the loan they write goes in default the investor can basically get something back in [...]
July 30th, 2008 at 3:12 pm
[...] true. Sometimes its better to call other lenders like Countrywide or Wells Fargo first to get your 30 year fixed rate mortgage quote and then call Quicken Loans. 5. Don’t be alarmed if the mortgage banker is asking [...]
July 30th, 2008 at 4:42 pm
[...] lower. As an example you could get a 3 year ARM with an interest almost 2% lower than a 30 year fixed mortgage. This was the same case for the 5 year, and 7 year ARM’s [...]
August 5th, 2008 at 2:03 pm
[...] with the first scenario, you have a high credit score which makes up for the other low factors. A 30 year fixed rate mortgage has relatively the same interest rates between the two. Its just that sometimes the mortgage [...]
August 12th, 2008 at 9:02 pm
[...] and home equity loans it forced a lot of companies to do one normal conventional loan like a 30 year fixed rate mortgage. Things are going to start getting back to where they were before the housing boom because of this. [...]
September 8th, 2008 at 6:47 pm
[...] rates rise and fall and banks did not want to give out all of the money they had invested in a 30 year fixed mortgage. They instead would not mind giving you a 30 year mortgage but it had to be at an adjustable rate [...]
September 9th, 2008 at 4:16 am
[...] not to vote for him if everything he has for me is little bits of info. There was no talk about 30 year mortgages or the growing foreclosure problem. With so much talk about these in the news every day I would at [...]
September 29th, 2008 at 4:52 pm
[...] start the mortgage shopping process by comparing different mortgage companies interest rates on the 30 year fixed rate mortgage. This is a safe bet and 9 out 10 times should be the way that most people go about picking the [...]
October 9th, 2008 at 8:21 pm
[...] closer. It was mainly because I could not talk clients into refinancing their already great 30 year fixed rate mortgage into a new loan just because it saved them $70 a month on their bills. I knew it did not make [...]
October 16th, 2008 at 3:52 pm
[...] does not matter if it is because you are trying to refinance from a adjustable rate mortgage to a 30 year fixed rate mortgage or if you are just looking to take cash out of the equity of your home. Every single mortgage [...]
November 15th, 2008 at 5:55 pm
[...] The unemployment assistance program has good intentions. Its there to help people make their 30 year mortgage payments and to buy groceries. But what do you do when probably 10% of your states workforce is [...]
November 30th, 2008 at 3:28 pm
[...] and home owners insurance are $4,000. This would make your monthly esrow payment $333. If you had a 30 year fixed rate mortgage of $125k at 6% your principal and interest payment would be $750 a month. If you escrowed it would [...]
December 5th, 2008 at 12:52 am
[...] written at CNN today it talked about how the treasury is throwing around the idea of lowering 30 year mortgage rates down to 4.5%. If the Treasury Department steps in and does this it does nothing to fix the down [...]
December 10th, 2008 at 10:41 pm
[...] the area better than larger mortgage lenders and are willing to take a risk. Interest rates on a 30 year fixed rate mortgage for a mobile home are typically just a little bit higher than normal conventional home loans. There [...]
December 13th, 2008 at 11:11 pm
[...] lower. As an example you could get a 3 year ARM with an interest almost 2% lower than a 30 year fixed mortgage. This was the same case for the 5 year, and 7 year ARM’s [...]