Home Loans -- The Hot New Product? The 30-year Mortgage

Home Loans -- The Hot New Product? The 30-year Mortgage
By Charles Essmeier

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.

About the Author: ©Copyright 2005 by Retro Marketing. Charles
Essmeier is the owner of Retro Marketing, a firm devoted to
informational Websites, including http://www.End-Your-Debt.com,
a Website devoted to debt consolidation information and
http://www.HomeEquityHelp.net, a site devoted to information on
home equity loans.

Source: http://www.isnare.com