San Diego, CA (PRWEB) March 22, 2014
A new article from LoanLove.com takes a look at 30 year fixed mortgages and their benefits. LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. This new article continues to help loan borrows by helping them to decide if a 30 year fixed rate mortgage is right for them.
The article states, “And the winner is: The 30-year fixed loan! If there were a popularity contest for mortgages, the 30-year fixed would win, hands down. Historically, the 30-year fixed loan is the mortgage industry’s most popular type of loan; if your parents or your grandparents had a loan, chances are, it was a 30-year fixed loan. So what is a 30-year fixed loan? Well, just like it sounds, it’s a loan that has a repayment term of 30 years – that is, your payments will be spread out equally over three decades – at an interest rate that’s set – or “locked in” – when the loan is taken out.”
Loan Love explains that over the years more loan products have become available, but the 30 year fixed is still the most popular for a number of reasons. For example, the article explains that one of the chief benefits of this home loan option is that there are no surprises down the road. Since the rates is “fixed” payments over the life of the loan will always be the same, which makes things much easier to plan for when trying to fit everything into a budget.
Having an “inflation-proof” mortgage is also a big pro for 30 year fixed mortgages. The article says, “Even if the value of a dollar decreases over the life of your loan, the amount you pay is not adjusted for inflation. For instance, suppose you bought a loaf of bread in 1970. According to the USDA, that loaf would have cost about 28 cents. Fast-forward to 1990 and that same loaf would have cost about 70 cents. Similarly, if your loan payment was $280 in 1970, inflation would mean it would cost about $700 for the same mortgage in 1990. But since your rate is locked in, you’d still only be paying $280.”
Lastly Loan Love’s guide explains that these loans also offer flexibility. For example, if the homeowner’s income improves they will have the option to pay off their mortgage early, which can mean big savings on interest. However, the article also points out that this type of loan, while very good, is not without its potential disadvantages. The two biggest, according to the Loan Love guide, are:
- “If interest rates decrease, as they have in recent years, you could be paying more now for a mortgage you took out 10 years ago than you would for a loan you took out last year.
- Because payments are drawn out over such a long period, the total amount of interest you’ll pay is often much more than the total interest of a loan with a shorter term.”
Loan Love’s parting advice for home buyers is: “Just because the 30-year fixed loan has been the most popular, that doesn’t mean it’s the best product for you (in fact, one of the reasons it’s been the most popular is because for many years, it was pretty much the only product out there). There are more mortgage options today than ever before; take a close look at your finances to figure out which loan type makes the most sense for you.”
For more information on the benefits and drawbacks of 30yr fixed rate mortgages, read the full guide at LoanLove.com.