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Arizona Fixed Rate Mortgage

A fixed-rate loan refers to a fixed designation for the loan term. Lenders can provide a term of 30 years for the amortization. This is very popular for long term buyers that have young families. The interest rate is locked in for fixed-term interests, so there is the advantage of stability when giving the monthly repayments.  The only problem on interest payments is one is going to end up providing higher monthly amounts over the time of the loan compared to shorter terms of 15 years. Conversely, 15-year loans are more expensive over the short term because of higher premiums.

30-Year Fixed Mortgage

For this loan option, there are lower rates, and they spread over 30 years, so the borrower only pays a specific amount. The cumulative amount though is higher for the interest rate paid compared to 15 year fixed mortgages. There are advantages to the 30 year fixed rates, of course. The payments are more affordable and predictable for one. Secondly, one can clear the debt faster when additional fees are given to the principal. Thirdly there are no penalties for finishing off the loan sooner than the set schedule. There are considerations that even though the rate is fixed, it is possible to issue more cumulatively interest than with a shorter-term loan. A borrower needs to think about their plans for the long term. the fixed-rate mortgage is for families intending to stay generations because 30 years is a long time. ARMs are more popular because they allow flexibility and better opportunities to refinance.

15 Year Fixed Mortgage

The 15-year fixed mortgage is the same as the 30-year version but only charges interest over 15 years. All of these meet the terms of Fannie Mae. The only distinguishable facet of fixed-rate mortgages is the length of the mortgage term. The borrower is, in fact, able to stretch the payments from 10 to 50 years. The two essential elements for this loan are the principal and the interest.

The advantages of the 15-year term mortgage are similar to that of the 30 year fixed rate loans considering the interest rate and the monthly payment are the same. Utilization of a 15-year mortgage, the borrower repays the principal and interest each month. Due to the short period for the loan, the borrower also builds their home equity much faster than if they opted to go with the 30-year mortgage term. Home equity refers to the difference between how much the home is worth and how much is owed. The more capital is possessed, the more significant the portion of the current value owed. One of the best ways to build on equity would be through paying more of the principal of the loan. In so doing the borrower ends up paying off the loan quicker. Unfortunately, the 15 years fixed-rate loan is hard on disposable income as less goes to savings, and it is not as affordable.