Fixed Year Mortgage – How Many Years is Right For You?
Getting a fixed year mortgage is often the decision of many home owners. The question that many of these home owners must figure out is how many years do they want on their fixed year mortgage. There are many options available ranging from 5 to 40 years. The lower the amount of years, the lower the interest rate. With that being said, you must understand that if you are paying on a 5 year mortgage, your payments will be very large. If you get a 30 year mortgage, you will end up paying a higher interest rates, but your monthly payments will be more manageable.
Determining just how many years you want on your fixed year mortgage will take some work and calculations. There are many mortgage calculators available on the web but my favorite is here. The pie chart on that site will help you visualize how much you will pay in interest over the course of your home loan. One word of advice is to pick a monthly mortgage payment that YOU can afford. If you save money in interest but can’t make the monthly payments, you are basically throwing away all the saved money by making late payments.
The most common fixed year mortgage is the 30 year fixed rate mortgage just because it creates very manageable monthly mortgage payments. President Obama recently created the Making Home Affordable Plan which states that 31% of your household monthly income should go towards your mortgage payment. Figure out with your monthly income is and use this as a round figure to choose the amount of years you want on your fixed year mortgage.
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Mortgage Guide May Prove to be Very Useful - Economic Conversation on
Mon, 20th Jul 2009 2:25 pm
[...] down and talking with someone who has gone through the mortgage process is one of the best ways to educate yourself. They will not know everything there is to know about [...]
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