What is a 30-year fixed rate mortgage?
A conventional 30-year fixed rate mortgage features a steady interest rate throughout its lifetime. Spanning three decades, homeowners with this mortgage can look forward to consistent monthly payments for many years to come, which can provide peace of mind and help them budget their finances. A conforming 30-year fixed rate loan offers amounts up to $548,250 in most of the US and a maximum of $822,375 in high-cost areas. To decide if a 30-year fixed mortgage is right for you, ask yourself these four questions:
- How long are you planning to stay in your home?
If you are considering a 30-year fixed rate mortgage, you should be planning to stay put for the long haul. We recommend a minimum of 5-10 years in your new home.
- Would you prefer consistent monthly mortgage payments?
Like the sun rising in the east, the terms of a 30-year fixed rate mortgage never change. A consistent interest rate throughout the lifespan of your loan keeps your monthly mortgage payments the same for 360 months. Kiss those fluctuating mortgage payments goodbye!
- Would you prefer a low mortgage payment?
Due to the long-term nature of this loan, a 30-year fixed rate mortgage makes your monthly mortgage payments more affordable than a fixed rate mortgage with a shorter time frame. You end up paying more interest over three decades, but the principal repayment is spread over that same period of time. Lower monthly mortgage bills mean you can afford more house!
- Are you purchasing or refinancing?
Looking to buy a new home? This mortgage option is tailor-made for you. Looking to refinance your home at a lower rate? A 30-year loan may be too long. Consider a shorter term fixed mortgage or an adjustable rate mortgage based on your budget and refinancing goals.
Conventional 30-year fixed rate mortgage features include:
- 3-5% minimum down payment options for qualified homebuyers.
- Regular, qualified income required.
- No private mortgage insurance (PMI) with 20% or more down.
- HomeStyle renovation loans with options as little as 5% down .
- Seller assistance with up to 3% of closing costs.
- Loan options up to $5 million for non-conforming mortgages.
- 203k renovation loans with a minimum 620 FICO score.
30-Year Fixed Mortgage Payments
As with most amortized loans, the initial payments of your 30-year fixed rate mortgage are primarily devoted to paying of interest. As the years roll by, this will gradually shift and you’ll reach a point where your monthly payments cover more principal than interest.
What does this mean? As you embark on your 30-year fixed rate mortgage, your first couple years of mortgage payments won’t make much of a dent in your loan’s principal balance. Once you pay off most of the interest, the latter years of your mortgage will be devoted to your principal and you’ll see your mortgage balance decrease dramatically.
- Sample payment does not include taxes, insurance or assessments. Mortgage Insurance Premium (MIP) is required for all FHA loans and Private Mortgage Insurance (PMI) is required for all conventional loans where the LTV is greater than 80%.
- Mortgage interest rates shown are based on a 60-day rate lock period.
- The displayed Annual Percentage Rate (APR) is a measure of the cost to borrow money expressed as a yearly percentage. For mortgage loans, excluding home equity lines of credit, it includes the interest rate plus other charges or fees (such as mortgage insurance, discount points, and origination fees). For home equity lines, the APR simply reflects the interest rate. When shopping for a mortgage, you can use the APR to compare the costs of similar loans between lenders.
- The estimated total closing costs above do not constitute and are not a substitute for a loan estimate, which includes an estimate of closing costs, than you will receive once you apply for a loan. The amounts provided above for Estimated Total Closing Costs, are estimations based on the state selected. This is NOT a mortgage loan approval or commitment to lend. The actual fees, costs and monthly payment on your specific loan transaction may vary, and may include city, county or other additional fees and costs.
- These mortgage rates are based upon a variety of assumptions and conditions which include a consumer credit score which may be higher or lower than your individual credit score. Your loan's interest rate will depend upon the specific characteristics of your loan transaction and your credit history up to the time of closing.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate, Inc. Guaranteed Rate, Inc. its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.