People, who have chosen fixed rate mortgages can use one of the following three types, taking in account their own circumstances:
- 30-Year Fixed Rate Mortgages
- 15-year Fixed Rate Mortgages
- Biweekly Mortgages
- “Convertible” Mortgages
A 30-year fixed rate mortgage is the traditional favorite, though it is not the only choice nowadays because volatile financial times created a whole new range of selections. However, the 30-year fixed rate mortgage may still be the best mortgage for your circumstances. It offers the lowest monthly payments of fixed rate loans, while providing for a never-changing monthly payment schedule.
With the 15-year fixed rate mortgage a homeowner owns his homes free and clear in half the time. Interest rate is lower than a 30 year fixed rate mortgage. The major disadvantages or the 15-year fixed rate mortgage are the sometimes higher monthly payments. But if saving on total interest costs and cutting the time to free and clear ownership are important to you, the 15-year fixed rate mortgage is a good option.
With bi-weekly payments, you pay half of the monthly mortgage payment every 2 weeks, rather than the full balance once a month. This is comparable to 13 monthly payments a year, which can result in faster payoff and lower overall interest costs.
Your lender might offer several biweekly payment options, where you make a payment that equals half of your normal monthly payment every two weeks. There is a considerable difference between different payment plans, so you should check with the lender to find out how they will treat your biweekly payments, exactly.
Convertible Mortgage is a short-term closed mortgage with a fixed interest rate and the flexibility of converting to a long-term closed mortgage at any time.
