A Look at the Cheapest Fixed Rate Mortgages

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Saturday, November 29th, 2008 Subscribe To Our Feed

by Gugu Martini

It is quite normal for potential home buyers to look into 30 year or 15 year fixed mortgage rates when considering their monthly repayments. Of course the goal for most people with a mortgage is to pay it off early and save themselves a great deal of money in interest repayments. Decisions of this nature need careful consideration before any commitment is made. It is important to make sure that the interest rate does not change over the course of the loan.

If you are offered a deal that appears to be too good to be true than it probably is. For loans that have 15 year fixed mortgage rates, the same amount of interest is maintained throughout the life of the loan. For those individuals that do not like hidden surprises, this is always a benefit. My wife and I had already decided to research long term fixed mortgage rates when we started looking at homes for sale.

Even though it was important for us to pay off our loan at the earliest possible opportunity, we did not want high, unrealistic monthly payments which we would have trouble maintaining. It became obvious that we had to look at fixed rate mortgages over a longer period and not just 15 year plans. We did not really like the prospect of having a mortgage as we approached retirement so were really hoping to get one of the loans with 15 year fixed mortgage rates. We were worried about the emphasis placed on early completion of the mortgage.

After taking everything into consideration we decided on a 30 year loan instead. There were many things that factored into this decision.The main reason was that I found out my wife was pregnant. My wife was going to raise our child from home so her addition to the monthly income would be restricted. Our monthly payment would have been too high if we had committed ourselves to the 15 year fixed mortgage plan. We could see the financial problem of getting in too deep even though there were benefits to a shorter loan period. Despite the trepidation of having a longer term loan, it did reduce the repayments considerably.

We found that if we could make a few extra payments throughout each year then it would gradually reduce the principle sum owed. By doing this you can also reduce the term of the mortgage by quite a few years. This is well worth it in the long term but it does require some discipline. Taking our needs and abilities into account was more important than our desire for a shorter term mortgage plan. All things considered, it all worked out for the best in the end.

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