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Afford Higher Monthly Payments? Possibly Lower the Rate


The most basic, conventional mortgage loan that you can consider is the 30-year fixed rate mortgage. This means that you will pay back the loan over the term of thirty years, and that the interest rate you will be charged will remain the same ("fixed") over that entire thirty-year period.

The longer you hold a loan, the more interest the lender will be able to collect from you. So, if you can pay back the loan faster, you will pay less interest. Some people would advocate that you always take out a 30-year loan, and when extra cash falls into your hands, you should consider making extra payments so that you pay off your loan faster.

However, if you know ahead of time that you can definitely pay more for the mortgage loan each and every month for the life of the loan, you may want to consider getting a 15-year fixed loan. While the payments will be higher, you will not only pay the loan down faster, saving you interest, you will also have a good chance of getting a cheaper interest rate right from the start. You still have to stay under the 28/36 rule in most cases, so be careful. Otherwise, it is something to consider.

It's good to always get a quote on the most conventional, most popular loan, the 30-year fixed rate, and then compare it against the benefits of a 15-year loan. Remember, the flexibility of having a 30-year loan, with its lower payments, may far outweigh the difference in interest rate, depending on your financial situation.

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