There are several things you can do to figure out how much mortgage you can afford, including calculating a realistic budget before purchasing a home.
Summary: This is part of an ongoing series that explains the different types of mortgage loans used by home buyers and homeowners in Washington State. Today, we’ll talk about the benefits of buying a home in Washington with a 30-year fixed-rate mortgage loan. It is, after all, the most popular financing method among buyers.
If you are ready to apply for a home loan, do you know what options you have? Many buyers choose a 30-year fixed-rate mortgage, for many reasons. There are certain benefits that make this a very popular option among borrowers.
Key Features of a 30-Year Fixed-Rate Mortgage
Last week, we examined the key features of an adjustable (ARM) loan. We talked about the hybrid ARM in particular, which has an interest rate that stays the same for a certain period of time and then starts to change annually.
The more popular 30-year fixed-rate mortgage works differently. In fact, the name of this home loan reveals two of its most important characteristics:
- It has a repayment term or window of 30 years.
- It has a mortgage rate that stays the same or “fixed” for the entire life of the loan.
Both of these features are related, as far as benefits go. A home buyer who uses this type of loan has the opportunity to lock in a specific interest rate, and to keep that rate for the full 30-year repayment period. So there’s a lot of certainty over the long term.
An adjustable-rate mortgage (ARM), on the other hand, has a rate that could potentially change from one year to the next. This makes it less predictable, when compared to the 30-year fixed option. Borrowers in Washington State who choose a fixed mortgage know that the rate will stay the same for as long as they keep the loan.
Another key feature of the 30-year fixed home loan is the relatively smaller monthly payment. That’s because the payments are spread out over a longer period of time, when compared to a shorter term loan product like the 15-year fixed. This appeals to home buyers in Washington who are mostly concerned with minimizing their payments.
The Most Popular Type of Home Loan in Washington
The 30-year fixed mortgage is by far the most popular loan type among home buyers in Washington, and elsewhere across the country.
But industry statistics clearly show that most home buyers in Washington and nationwide prefer to use the 30-year fixed-rate mortgage loan when buying a house. They do this, primarily, for the two reasons stated earlier. It’s a predictable loan product, and it allows borrowers to minimize their monthly payments by spreading them out over a long period.
Explore Your Financing Options
As you can see, home buyers in Washington State have many different mortgage options to choose from. And we haven’t even discussed the differences between conventional and government-backed loans.
This underscores the importance of speaking to a knowledgeable loan officer who understands the key features of different financing options. There’s a type of loan for every borrowing scenario. You just have to know which one is right for you.
Are you planning to buy or refinance a home in Washington? If so, we’d love to help. Sammamish Mortgage is a local mortgage company from Bellevue, Washington serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest. Please contact us if you’d like to learn which mortgage product might be best for your situation.