20 year fixed mortgages rates are one of the types of mortgage loan for home buyers. With predictable payments, 20 year long term homeowners can plan their budgets and guard against rising interest rates. But a 20 year fixed mortgage rates are not for everyone with its higher payment than a 30 year mortgage and a reduction in your buying power.
20 Year Fixed Mortgage Rates Features
20 year fixed mortgage rates feature set rates, 20 year long term low monthly payments, and low risk. Interest rates are determined during your loan application process. Rates are set by the market. You can also lower your interest rate by paying points up front. This option only makes sense if you stay in your home for several years.
20 year long term low monthly payments are another benefit of this type of home loan. Over time, inflation will raise the price of everything except your mortgage payment. As your salary increases, your mortgage costs will also take a smaller percent of your income.
The low risk of 20 year fixed interest rates also appeals to borrowers. You don’t have to worry about rising interest rates or a balloon payment. You can also repay your loan early, saving money on interest payments.
Traditionally, fixed rate mortgages were 30 or 15 year terms. Now lenders offer a couple of additional options. 20 year loans are still the most popular with their low monthly payments. A 30 year loan also enables you to qualify for more than shorter loans.
Biweekly mortgage, as the name implies, requires half your mortgage payment every other week. At the end of the year, you have made an extra mortgage payment. You can have your mortgage repaid in 18 to 19 years. Most lenders also allow you to roll over to a 30 year term with no penalties.
Fixed Rate Drawbacks
Even with their benefits, fixed rate mortgages aren’t for everyone. Alternative mortgages enable you to borrow more than with a fixed rate mortgage. If you move in less than 7 years, you will also probably pay more in interest payments than if you went with an adjustable rate mortgage. Most homeowners move within the fist 7 years of living in a house. You are also locked into an interest rate that could drop in the future.