A 30-year fixed mortgage is a mortgage that has a specific, fixed rate of interest that does not change for 30 years. 30-year fixed mortgages are the most popular mortgage product nowadays and are especially popular among first-time home buyers.
If you choose a 30-year fixed mortgage, your monthly payment will be the same every month for 30 years. However, the breakdown of how much of your mortgage payment goes to principal and how much goes to interest will shift throughout the lifetime of the loan. Your payments will be spread over 30 years, with the interest payments making up the majority of the payment at the beginning, and then principal paid off toward the end of the term.
- Easier to budget the rest of your monthly expenses because your mortgage payment is the same amount every month.
- Lower monthly payment in comparison to other mortgage products.
- The 30-year time period is more appropriate if you plan on living in your house for a really long time or indefinitely.
- Because your mortgage payment is generally lower, it frees up cash for emergencies, to pay off other debt that has higher interest, or you can use it to diversify your investments.
- When rates are low, you may want to lock in a really great low fixed rate.
- Higher interest rates than shorter-term fixed mortgages or adjustable-rate mortgages.
- Most people sell their homes or refinance the 30-year term expires.
- Not building equity very fast at the beginning of your loan.
Most of the time, there are not pre-payment penalties with a 30-year fixed mortgage, so you can always pay off your mortgage more quickly and put additional money toward principal without being locked into a shorter-term fixed loan.
See how much money you can save by paying off your 30-year fixed mortgage early.
Shop for a 30-year fixed mortgage.