30 Year Fixed Rate Mortgage Loan
Why is a 30 Year Fixed Rate Loan So Popular?
Traditionally, the 30 year fixed rate loan has been the most popular loan when purchasing a home or refinancing. This amortization schedule allows you to have a comfortable payment plan on a monthly basis and pay off the loan in 30 years. In most cases, you can pay off up to 20% extra per year in equity. Most lenders have this stipulation in the loan documents terms and conditions. Look for it when you sign your loan documents. Compared to a 15 year mortgage, the homeowner who has this type of loan has been given the flexibility to have a comfortable mortgage payment while allow the homeowner the flexibility to pay off a good portion of the loan, in principle reduction payments at anytime, under the discretion of the homeowner, NOT the lender. If you had a 15 year mortgage, you are stuck with the higher payment on a monthly basis and have no flexibility in payments.
Those who have a 30 year mortgage can use this strategy to reduce the loan over time and pay off the loan early. Try making 1 extra payment per year and add it to the principle pay down of your mortgage. If you were to do that, you could pay off your 30 year mortgage in about 17.50 years. If you made an additional 2 payments per year you can pay off the average 30 year mortgage loan in about 13 years. Now, that’s a smart way to reduce your mortgage quickly, yet have the flexibility of a 30 year amortization schedule on your loan.
Contact a LendPlus Financial loan agent as they can run the figures on how you can make extra payment on a 30 year mortgage and pay off the loan quicker.