There is always a debate when home buyers have to decide on the merits of 15 or 30 year fixed mortgage rates. No-one wants a mortgage hanging around their neck forever but with homebuyers entering the market later, an early repayment of this loan is important. Take some time to think about everything carefully before any agreement is signed. It is important to make sure that the interest rate does not change over the course of the loan.
It is always wise to avoid agreements that do not appear to have any negative aspects because they invariably have but are hidden. A 15 year fixed rate mortgage means the interest rate remains stable for the life of the loan. This is of great benefit for anyone that does not like surprises. When we were looking to buy a home, my wife and I decided to go for a loan with a 15 year fixed mortgage rate.
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. So in consideration of this point we also looked at longer, 30 year fixed rate mortgages as well. The 15 year fixed mortgage rate was the plan we really wanted because neither of us wanted to be still paying a mortgage when we close to retiring. We felt that there was a great deal of emphasis on paying the mortgage off early.
We thought about it long and hard and despite the pressure we decided to go with the 30 year loan plan. Many factors were taken into account when reaching this decision.Finding out my wife was having a baby made making the choice so much easier! My wife was going to raise our child from home so her addition to the monthly income would be restricted. The downside to the 15 year fixed mortgage rate was the higher monthly repayment. For us it just was not feasible as we would just be in over our heads. 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. To our surprise we also discovered that we could knock years off our loan by doing this. This takes some discipline but it is well worth the effort it in the long term. 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.
Author is an executive at Integra Global Solutions http://www.integraoutsourcing.co.uk/invoice-processing.html, which provides cost effective accounting bookkeeping outsourcing services for 100s of accountants in UK, Ireland & Europe. For more details log on to http://www.integraoutsourcing.co.uk/invoice-processing.html. You are free to publish this article as long as you have a link back to http://www.integraoutsourcing.co.uk/invoice-processing.html
