What is a 30-Year Fixed Mortgage?

What is a 30-Year Fixed Mortgage?

 

A 30-year fixed mortgage is a fixed interest loan with payments spread over a long period of 30 years. This helps keep the monthly payment down compared to other shorter-term mortgage products. 

This is one of the most common types of mortgages today primarily because it provides the borrower with the security of a fixed payment and the ability to get a large mortgage loan with low payments to be paid over a period of 30 years.

Who is This Loan Best For?

30-year fixed loans are best suited for people who want a mortgage with lower monthly payments and with interest rates that remain the same throughout the life of the loan regardless of the changes in the economy. 

With a 30-year fixed-rate loan, you’ll always pay the same principal and interest every month regardless of what happens to economic factors such as inflation and interest rates. 

However, it is important to keep in mind that the loan has a higher interest rate than other options such as the 15-year fixed-rate loan and you also end up paying more interest overall in the long run. 

We are a mortgage company located in Delaware County, and these mortgages are great for Delaware County residents. You do not have to live in Delaware County to take advantage of this type of loan, we help buyers from all over to secure a fixed mortgage. 

What Documents Will You Need To Apply?

How Does a 30-Year Fixed-Rate Loan Work?

The loan is structured in such a way that you’ll pay the same amount every month until you pay off the entire mortgage in 30 years. Compared to the shorter 15-year fixed-rate mortgage, you’ll pay more interest over the life of the 30-year loan but your monthly principal and interest payments will be significantly lower.

You may also need to pay private mortgage insurance, or PMI, depending on how much you are willing to pay as a down payment for the home you want to buy or the amount of equity you already have if you are refinancing.

Qualification Requirements for a 30-Year Fixed-Rate Loan

To qualify for a 30-year fixed-rate loan, you’ll need the following:

• Be prepared to pay at least a 3% down payment of the total value of the property 
• Have a minimum FICO score of 620
• You should also have a debt-to-income (DTI) ratio not exceeding 49%. You can easily estimate your DTI by getting a sum of your monthly debt payments such as car and credit card payments and dividing the total by your monthly income before taxes or contact your local mortgage broker for assistance.
• You should also have enough funds to cover closing costs, which are usually around 2-6% of the property’s value on a home purchase.

What Are the Benefits of 30-Year Fixed Loans?

There are several benefits of getting a 30-year fixed-rate loan including the following:

• Lower monthly payments than a 15-year, 20-year, or 25-year fixed mortgage because the payments are spread over a longer time.
• You also have the option to pay off the entire mortgage at any time without incurring prepayment penalties
• If you pay a down payment of 20% or higher, you will avoid paying mortgage insurance
• The fixed interest rate for the entire life of the loan regardless of whether the rates rise or fall
• The loan gives you the opportunity to buy a home with as little as a 3% down payment
• You can also refinance your primary home with the loan for up to 97% of the home’s value

Contact us today if you are looking for a trusted and reliable 30-year fixed-rate mortgage broker in Delaware County or beyond. We will match you with the best loan product and rate available based on your personal needs and circumstances.