The 30-year fixed-rate mortgage loan is the most popular financing option among home buyers in Washington State. It’s more widely used than the 15-year fixed, the 5-year adjustable, and all other types of home loans. But why?
This article explains the potential benefits of using a 30-year fixed-rate mortgage when buying a house in Washington State.
What Is a 30-Year Fixed-Rate Mortgage?
This type of mortgage loan has a fixed interest rate and a repayment term of 30 years. It is the most commonly used of all the different home loan types, and we’ll look at the reasons why in a moment.
One of the key features of this product is the fixed interest rate. When you use a 30-year fixed home loan to buy a house in Washington State, it will carry the same mortgage rate for the full 30-year term — or until you sell or refinance.
This is an important distinction, because some types of loans have an interest rate that can change or”adjust” over time. But the 30-year fixed-rate mortgage stays true to its name by remaining unchanged for the full repayment term.
Benefits for Washington State Home Buyers
The 30-year fixed is the most popular mortgage option among Washington State home buyers, and for several reasons. Here are the primary benefits.
- Payment stability: Fixed-rate mortgage loans offer the benefits of long-term stability and security. They are designed to protect borrowers from unexpected interest rate changes while they are holding the loan. This makes the 30-year fixed mortgage a good option for Washington State home buyers who prefer payment stability over the long term.
- Peace of mind: This is an extension of the first benefit. Borrowers who choose the 30-year fixed-rate home loan enjoy the peace of mind that comes from knowing they have a stable, unchanging mortgage loan. In contrast, borrowers who use adjustable-rate mortgages (or ARMs) face more uncertainty because their rates can change over time.
- Low monthly payment: Another benefit to using a 30-year home loan (compared to one with a shorter repayment term) is that you end up with a smaller monthly mortgage payment. By spreading the payments out over 30 years instead of, say, 15 years, you’ll reduce the size of your monthly payments.
- Widely available: As mentioned earlier, the 30-year home loan is one of the most popular mortgage options among home buyers in Washington State. They are in high demand. As a result, just about every bank and mortgage company offers them.
Those are the benefits. But there are some drawbacks as well. The downside to using a 30-year loan is that you might pay for that long-term stability in the form of a higher interest rate. On average, the interest rates assigned to 30-year loans tend to be higher than those assigned to shorter-term mortgage loans.
Another potential drawback is that you’ll pay interest for a longer period of time, compared to a 15-year mortgage. So your total interests costs will be higher. Of course, many people who use 30-year fixed-rate loans sell or refinance their homes long before 30 years. So this might not be a major drawback in all scenarios.