Best 40 Year Mortgage

30 Year Fixed Mortgage Rates

There comes a time in everyone’s life when they need to decide between opting for those 30 year fixed mortgage rates or 40 year mortgage rates. I am not going to say that making this decision is easy, and it all depends on whether you can really afford a 30 year mortgage or if 40 year mortgages are your only option.

You see, when you decide to finally stop renting and start owning, the house that you choose to buy should be within your means. While 40 year loans can allow you to buy a bigger or more expensive home, you have to understand that there is a reason why most people go for 30 year mortgages instead. No, that reason is not that 30 year mortgage rates are lower than those for 40 year loans. Quite on the contrary actually, since 40 year mortgage rates tend to be quite lower.

It all comes down to simple math. Let’s assume that you found your house and you decided to go start shopping around to find what the current 30 year fixed mortgage rates are. First of all, you have to understand that when it comes to fixed rates, they will most likely be higher because they are fixed. But on the other hand, you will have the an ease of mind whether you go with a 30 or a 40 year fixed mortgage, because right off the bat you know how much money you will need to be debt free. So, back to what I was saying. I am not going to get into what the current 30 year fixed mortgage rates today are because they change constantly. However, let’s assume that your payment with a 30 year mortgage will be $1,500.

For the same amount, if you were to choose 40 year mortgages, you would pay around $1,250. Now, on to the math I was talking about. With those 30 year mortgage rates, you will end up paying around $540,000 for your home, whereas with the 40 year mortgage rates that we mentioned, the sum will be closer to $600,000. As you can see, in the long run, 40 year mortgage loans tend to be more expensive. So, why do they even exist? It’s simple.

It is a known and accepted notion that you should put about one third of what you make towards your mortgage payment. So, in the case mentioned above, if you don’t make more than $4,500 per month, then you simply cannot afford to pay those 30 year fixed mortgage rates. However, you can afford any 40 year mortgages you want, while making less than $4,000 which is the case for many people these days.

Deciding whether you will go for a 30 or 40 year mortgage comes down to how much you can afford to put towards paying off your mortgage. While many people decide that a 40 year fixed mortgage loan is best for them, there are many that choose 30 year fixed mortgage rates instead!