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Home Loans -- The Hot New Product? The 30-year, Fixed-rate
Mortgage
In recent years, the mortgage industry has introduced dozens
of new types of loans. The needs of every borrower are different,
so the mortgage companies have tried to come up with an answer
for every problem. They've introduced 40-year mortgages, promoted
15-year mortgages, and introduced the wildest array of
variable-rate mortgages imaginable. There are mortgages that have
interest rates that adjust every few months, every few years, or
just once. A recently popular product that thrives on the East
and West coasts is the interest-only mortgage, which reduces
payments by not requiring payment on the loan's principal for the
first few years of the loan. The prospective homebuyer could have
as many as one hundred possible types of loans to choose from
when searching for a mortgage. Amidst this huge array of loan
types, one type is growing in popularity faster than all the
rest, and it may surprise you. The fastest-growing type of
mortgage in America right now is the traditional 30-year,
fixed-rate loan. Last year, only about 35% of all borrowers took
out a 30 year, fixed-rate loan, but so far this year, the rate
has increased to nearly 50%.
This may seem odd, as most everyone has been opting for
adjustable-rate mortgages for the last few years. Adjustable rate
mortgages tend to offer lower interest rates, and lower interest
rates mean lower payments. These loans have been popular with
buyers who move often, have lower incomes or buyers who simply
want to invest their money elsewhere. So why is the 30-year
fixed-rate mortgage back in style? Because interest rates have
dropped to their lowest point in fourteen months, and they are
nearly as low as they were in the summer of 2003, when they
reached the lowest point on record. In short, the 30-year
fixed-rate mortgage is not only seen as competitive with other
types of loans, but it is actually seen as safer. Borrowers who
have adjustable-rate mortgages enjoy their biggest advantage when
rates are high, knowing that their interest rate is lower than a
fixed-rate mortgage. But when interest rates for the market as a
whole reach historic lows, the borrower with an adjustable-rate
mortgage knows that their rate can only go up. At times like the
present, when rates are only likely to go up, converting an
adjustable rate loan to a fixed-rate loan is a smart move.
First-time buyers can safely take on a 30-year fixed-rate loan
and be comfortable in the fact that their rate will stay fairly
low for the duration of their loan.
Sometimes, the way things have always been done turns out to
be the best. While there are still some buyers who will benefit
from adjustable-rate loans, most borrowers would do well to lock
in their loan at a fixed rate now. Historically, fixed-rate
mortgages have rarely been under six percent, so obtaining such a
loan while they are available is one of the smartest moves a
homeowner can make.
©Copyright 2005 by Retro Marketing.
Charles Essmeier is the owner of Retro Marketing, a firm
devoted to informational Websites, including End-Your-Debt.com, a
Website devoted to debt consolidation
information and HomeEquityHelp.net, a site devoted to information
on home
equity loans.
 MORE RESOURCES updated Fri. September / 03 / 2010
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