Why people love our 30-year fixed mortgage

There are a lot of mortgage products out there, and if you’re just getting started on the homebuying journey, the glut of options can leave your head spinning. We offer plenty of home loan options at OCCU, but most of our members opt for a 30-year fixed rate mortgage. Want to learn more about the features, pros and cons of this type of mortgage? Let’s dive in!

Just like it says on the tin, a 30-year fixed rate mortgage spreads your payments out over 30 years, making it one of the most affordable ways to purchase a home. Because you lock in the interest rate at the time you get your mortgage, you know you won’t have any surprises when it comes to the monthly payment. There will be minor adjustments to your monthly payment over the lifetime of the loan as your property taxes, insurance premiums, homeowner association or condo fees change, but overall, a 30-year mortgage gives you a consistent, predictable payment for the next 30 years that lets you set your household budget accordingly.

A 30-year term, compared to a shorter term loan like the 15-year option, also gives you the opportunity to consider higher-priced homes. Because you spread payments out over a longer period, you’ll be able to borrow more at the same monthly payment, or have a lower monthly payment for the same loan amount. Additionally, because this loan provides a tax deduction from the interest you pay on your mortgage, it will provide you with savings through the entire 30 year term.

This is also a fully amortizing loan—meaning your monthly payment covers both the principal and the interest, and as long as you haven’t refinanced or made other changes to the terms of the loan, the full amount will be paid off after the 30-year period. All of this makes this safe, budget-friendly, hassle-free loan type one of the most popular mortgage options for homebuyers.

If you plan to stay in your home for a long time, a 30-year fixed interest loan is ideal to keep your monthly payments affordable and predictable over the long run. If, during that period, interest rates drop significantly, you can also refinance up to 95 percent of your primary home’s value.

What are the disadvantages?

The long term of this loan isn’t right for everyone. It makes home ownership affordable, but you’ll pay more interest over the life of the loan than you would with a shorter term mortgage. Fixed-term loans also tend to have higher interest rates, so initially you’ll pay less towards your principal than you might with another type of loan. Because of this, it’s not the best loan for homeowners who purchase a home with the intention of selling it in a few years. For example, if you intend to sell your home in five years, a 5/1 Adjustable Rate loan may be a better option for you. With this type of adjustable rate loan, you get five years of a low fixed interest rate, and then the loan converts to an annually adjusted rate based on an index.

Another factor to consider in a 30-year fixed-rate mortgage is whether it matches your financial and life goals. It’s important to take into account things like retirement age, putting children through college, taking care of elderly parents, etc. You may want to be mortgage-free sooner than 30 years, in which case a shorter fixed-term mortgage or an adjustable rate mortgage will serve you better.

We’re here to help you select the right financing option

If you’d like to learn more about 30-year fixed-rate mortgages [/30-year-fixed-rate-mortgages], our mortgage officers are here to help you understand all of your options and to assist you in making the best choice. They’ll guide you through every step of the financing process and help you get an accurate understanding of the bigger picture of your investment, including loan payments, insurance, taxes and the other costs associated with purchasing a home.

Learn more about the terms of our 30-year fixed-rate mortgage options.