30 Year Fixed Rate

30 Year Fixed Rate mortgages are a "classic" mortgage option. While many people think of them as "traditional", when the 30 year fixed rate, fully amortizing principal & interest mortgage was introduced during President Roosevelt's administration following the Great Depression, this was a revolutionary financial product which directly resulted in the housing boom we homeowners of America have been enjoying for over 60 years.

Today, the "old fashioned" 30 year fixed rate mortgage is an increasingly attractive option for borrowers who are wisely seeking the security of fixed rates. Interest rates on 30 year fixed rate mortgages haven't been this close to traditionally cheaper ARM adjustable rate loans in years, making the argument for borrowers considering refinancing their existing adjustable rate mortgage all the more simple: "A 30 year fixed rate mortgage can actually be cheaper than an ARM mortgage, so why wouldn't I want one?"

30 year Fixed rate mortgages are characterized by their interest rate (including compounding frequency, amount of loan, and term of the mortgage). With these three values, the calculation of the monthly payment can then be done.

Another popular version of the standard 30 year fixed rate loan is an introductory interest only period. One such program is a 40 year loan with an introductory 10 year interest only period followed by the typical 30 year fixed rate mortgage. This loan program give the homeowner lower payments for 10 years but also provides the security of have a fixed rate with no surprises.

30 year fixed rate mortgages are for borrowers that plan on keeping a home longer than 5 years. The interest rates will not fluctuate as they do with ARM loans. Rate increases and high default rate on ARM loans is pushing more borrowers to request a fixed rate mortgage.

Making just one extra payment per year can reduce the term of a 30 Year Mortgage to just under 23 years. Many consumers enjoy the benefit of a 30 year fixed rate mortgage because they know they can always prepay the principal in order to reduce the term.

A 30 year fixed rate loan has an interest rate that does not change during the term of the loan rate. A 30 year fixed rate loan is a conservative investment that provides stability and state of mind for the borrower.

» DISCLAIMER: The information contained in this article on '30 Year Fixed Rate' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.