The 15-year, fixed-rate mortgage can appeal to many people. There are two groups in particular, however, that this mortgage type may appeal to more. Older homebuyers, who are settled in their careers with higher incomes, are first. These are people who plan on paying off the home before retirement. Young homebuyers, who have substantial income and wish to make higher payments and pay off the home before paying for their children’s tuition, are second. So what makes this mortgage type so appealing to these two groups of homebuyers?
Lower Interest Rates
The shorter the mortgage term, the lower the interest rate. Therefore, the 15-year fixed rate loans will have lower interest rates than 30-year mortgages. Having a fixed rate mortgage means you will be paying this lower rate for the entire term of your mortgage.
Less Interest Paid Over Time
Going along with the lower interest rates associated with 15-year mortgages, is the amount of interest you will be paying over the life of the loan. If you can afford to make higher monthly payments, you will end up saving thousands of dollars compared to if you were to have a 30-year mortgage.
Predictable Monthly Payment
Your monthly payment will be the same every month with a fixed-rate mortgage. This makes it much easier to plan for the future and keep to a budget. If you have small children and hope to pay off your home before you have to pay for college tuition, having a set monthly payment makes it easier to see where you may be financially at that time.
Pay Off Your Mortgage Faster
The shorter mortgage term obviously means that you will pay off your mortgage faster than a longer-term loan. This also means that you will be building equity faster than you would with a 30-year mortgage.
If you this may be the type of mortgage for you, and are interested in learning more about a 15-year fixed rate mortgage you can apply online today!
For first-time homebuyers, coming up with the funds for the down payment on a house can be the biggest challenge. Gathering the right amount of money can take a lot of responsibility, effort, and most of the time, patience. Many first-time homebuyers are dealing with many other expenses, such as rent and school loan payments, which can make it difficult to save. So what are some ways to help you work on saving that down payment?
Learn how much you will need to pay
There are many different loan types available, which offer different down payment amounts to homebuyers. Have a lender educate you on the different programs and see what works best for you. Knowing an estimate of what your down payment may be is a great start to help you set up a savings plan.
Cut down on household expenses
Making small changes at home can help you save money each month. Electronics that are plugged in can use up energy even when they are not in use. Start unplugging cell phone chargers, stereos, or other electronics when they are not in use to save on energy bills over time. Another big way to save is by cutting down your cable costs. There are much more affordable options now that most of TV can be found online or with a service such as Netflix. If you can’t bear to ditch your cable company, consider lowering your plan to incorporate fewer channels. After all, how many channels do you actually end up watching every month?
Use a gift from family members
Some mortgages allow you to use a gift from family members toward your down payment on a house. You will need to provide a gift letter stating that you do not have to pay back whoever gave you the money, as well as copies of checks or money wires to your lender. Receiving gifts has become especially useful after the economy’s downturn, and a study done in 2012 revealed that almost 25% of first-time homebuyers received used a gift toward their mortgage from 2011 to 2012.
Save an affordable amount each week
Saving a little at a time is easier than trying to set aside large sums of money all at once. Make sure you have a set amount you put into savings each paycheck you receive. It may take more time to save this way, but saving a little at a time makes it manageable when balancing the other expenses you have.
Cash out some of your IRA
Did you know that first-time homebuyers can cash out up to $10,000 from an IRA account for a down payment on a house and avoid paying the early withdrawal fee? If you are married this means you can cash out up to $20,000 for the down payment. The great thing about doing this is you do not have to be buying your very first home to qualify for the exemption, as long as you or your spouse do not, or have not, owned a principal residence at any time during the previous 2 years.
Keep track of your progress
Be sure to keep track of your progress to know where you stand with your savings. Sometimes seeing the numbers increase can help you stay on track. You can make your own graphs or use a goal-setting program such as the one offered by Mint.com. Any extra motivation to help you continue saving could end up being a big help.
There is no question that the 30-year, fixed rate mortgage is a best seller when it comes to selecting a mortgage term. There have been plenty of loan options that have come and gone, but the 30-year fixed has been a staple in the mortgage industry for quite some time now. So what makes the 30-year fixed the most popular term? Here are some of the benefits that this mortgage term has to offer:
- Lower monthly payment. In comparison to shorter-term mortgages, the 30-year fixed is more affordable on a month-to-month basis. Since the life of the loan is longer, you are able to spend less each month.
- You typically only need a minimum of 5% down to qualify. This makes the 30-year fixed affordable as well. (Keep in mind that when you make a down payment that is less than 20% down, you will typically need mortgage insurance).
- Manage your finances easier. A 30-year fixed mortgage term makes it easier to manage homeowner finances than a mortgage with an adjustable rate since your interest payment will never change. (Please note that your monthly escrow payment may change, since taxes, and insurance costs may change).
- Free up money for more profitable investments. Working off our first point, this mortgage type’s lower monthly payment will help open up some money each month to put toward another investment.
- You can refinance up to 95% of your primary home’s value. This is a great benefit when you consider that the average homeowner moves or refinances every 4-6 years.
Taking all of these benefits into account, it becomes pretty clear why the 30-year, fixed rate mortgage has been the most popular option for homebuyers. If you are interested in learning more about this type or mortgage, or others, apply online today!
Are you considering refinancing your mortgage, but aren't quite sure if it is the best option for you? People normally refinance to save money, and there are many different ways to save money by refinancing. When you refinance, the process is similar to when you closed on your first mortgage, only this time around you are loaning money to pay off your first mortgage, and can end up with lower interest rates or a different mortgage term. Here are some different reasons people choose to refinance their home:
Get a Lower Interest Rate
The top reason for refinancing your mortgage is to get a lower interest rate. Lowering your interest rate by even just 1% can save you a considerable amount of money. Interest rates are still at all time lows which means you may have the opportunity to lower your interest rate by over 1%. The drop in the interest rate will mean that more money will go toward your principal balance rather than interest payments. This will help out your finances substantially in the long run.
Get a Fixed Mortgage Rate
Switching to a fixed rate mortgage from an ARM could be a great financial choice. If interest rates have risen since you first got your mortgage, so have your monthly payments. Many people choose to refinance to receive a fixed rate at today's low rates, which can save you money in the long run. This is an especially beneficial option if you are planning on keeping your mortgage much longer.
Shorten Your Mortgage Term
Do you currently have a 30-year mortgage? It could be worthwhile to refinance to a shorter mortgage term. Although this option will increase your monthly payments, it will save you the most money long-term.
Lower Your Monthly Payments
If you are looking for more of a short-term option, refinancing can be a great way to lower your monthly payments. Although shortening your mortgage term would save you more money in the long run, refinancing to lower your monthly payments will still save you a great deal!
Clear Your Credit Card Debts
Did you know that home equity can be used to pay everything off of your credit card? Refinancing your mortgage in order to clear credit card debt has been a growing trend due to the fact that mortgage interest rates are tax deductable, unlike your credit card debt. Refinancing to pay off your credit card can save you money and can rid you of high interest rate credit card debt.
Get Extra Funds
Refinancing now can help save you money, no matter what way you choose to look at it. Use these savings to help fund one of your own personal endeavors like fixing up your house or start saving for your child's college tuition.
If you are looking to refinance your home with today's low interest rates you can apply online or reach out to one of our trusted mortgage professionals by calling (855) NORCOM1!